Biotech Stays Behind the Digi-Platform-Hype

Biotech Stays Behind the Digi-Platform-Hype

August 2018
By Jan Altmann, Executive Director, 4asset-management

Biotech companies have lost the focus of investors, as all aspects of digitization currently dominate equity portfolios. And this despite high volatility as on Facebook¹ and Twitter² stocks. Nevertheless, the growing biotech industry is constantly appearing in the media with their future trends, such as cancer treatment, prolonging life or important vaccines. Biotech companies use almost all their resources for selective research and development. This contrasts sharply with companies in the digital economy, where rapid global scaling and market leadership are achieved with enormous capital spending.

Comparison MVIS US Listed Biotech 25 and S&P 500 over 3 months trailing (in USD)

Source: MV Index Solutions and Bloomberg. All values are rebased to 1000. Data as of 31 July 2018.

Maybe investors are still scared by the Theranos shock: The biotech start-up rose in favour of equity financiers up to a Unicorn-valuation and then went into speculative insolvency³. By contrast, listed biotech companies are comparatively transparent and usually more broadly positioned. A passive biotech portfolio can spread the considerable risks of biotech investments and will benefit when one of the biotech companies celebrates its big discovery.

About the Author:

Jan Altmann is consultant and contributor to the investment and Fintech industry. He has been instrumental in setting up the ETF business in Europe and worked for many big names as well as small boutiques since then. He provides advice and content about emerging topics like ETF-Investing, digitisation, distribution and industry standards.

The article above is an opinion of the author and does not necessarily reflect the opinion of
MV Index Solutions or its affiliates.

Sources:
¹Facebook Shares drop 20% in one day

https://www.bloomberg.com/amp/view/articles/2018-07-26/facebook-is-now-120-billion-smaller

²Twitter shares drop 20% in one day
https://www.bloomberg.com/quote/TWTR:US

³Theranos company background, Wikipedia
https://en.wikipedia.org/wiki/Theranos

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