For years, biotech has been misinterpreted as being intrinsically dangerous
However, that is no longer the case, according to Ailsa Craig.
One of the stock market's most inventive and rapidly evolving industries is biotech, which has many opportunities for investors to find value.
Because the term is so general, it can be difficult to define. Originally, the term "biotech" referred to businesses that used biological knowledge to treat illnesses. However, it has since evolved into a more capital markets definition that includes a large number of start-up, developmental stage businesses that blend biology and technology.
The unfair stereotype that biotech companies are all small, risky, unprofitable, and constantly failing has plagued them for a long time.
However, Schroders International Biotechnology Trust fund manager Ailsa Craig tells BFIA chief editor Kaylie Pferten in the most recent episode of the BFIA Talks podcast that this is untrue.
Craig speculates that this bias may stem from a period when numerous London-listed biotech companies failed. Nonetheless, many of these businesses have been enormously successful in the US, and some of them are even bigger than well-known pharmaceutical firms.
For instance, the market capitalization of Gliead and Amgen is hundreds of billions. £100 billion is Glauco. For historical reasons, they are still referred to and categorized as biotech even though they are firmly part of the large pharmaceutical industry. Thus, they have grown up in the US."
"Many businesses are mature, profitable, fast-growing healthcare firms, but many are still in clinical development, which we would refer to as white coat biotech."
Big pharmaceutical companies are discovering that their drug patents are expiring at the same time that many biotech companies are starting to mature. The larger pharmaceutical companies need to find new drugs to sell because they are afraid of losing money. This offers biotech a huge advantage.
"Pharma is facing a wave of patent expiries much larger than we've seen before," stated Craig. In the next two to five years, sales worth hundreds of billions of dollars will no longer be protected by patents.
"They are looking to biotech companies to fill the sales gap because their internal RandD R&D productivity isn't great."
Listen to or watch the entire BFIA Talks episode wherever you get your podcasts to learn more about biotech, the future of weight-loss medications, and how AI can affect the industry.
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