The Daily Telegraph - Saturday - Money
‘Unpredictable politicians are our biggest threat’
The healthcare sector took a sharp hit two years ago when the American presidential race dragged drug pricing into the spotlight, but share prices have now surpassed their previous highs. There are a number of specialist healthcare funds that offer investors access to the latest developments in drugs, treatments and medical technology.
The Worldwide Healthcare Trust, run by Sven Borho for more than 20 years, is a £1.6bn investment trust that has made three times the return of its benchmark index since its inception. It has around 65pc of its money invested in America, with the rest split between Europe, Asia and emerging markets.
Here, Mr Borho tells Telegraph Money why Alzheimer’s treatments are such a contentious area and why politicians remain the biggest risk to the sector.
The sector is specialised and you need a scientific background to correctly assess potential. At OrbiMed [the trust’s manager] we have 80 investment professionals dedicated to healthcare.
The biggest binary events in the sector are the results of clinical trials in key future drugs. That’s when share prices can triple, or fall by 80pc.
Even a large pharmaceutical company can move by 20pc or 30pc if it’s a key drug for them. This is where scientific knowledge, an understanding of statistics and a modelling of the potential outcome are key.
With all our expertise we should be better than generalists at predicting outcomes, and that has been a key driver of performance. We have significant holdings in emerging markets, as those are some of the fastest growing areas – particularly China. A whole wave of next-generation
CV: Sven Borho
Sven Borho is a founding partner artner of OrbiMed. .
He is the head of the listed d company and nd hedge fund portion of the he business, which includes drugs is being launched, such as the first “CAR-T” anti-cancer drug last year. This involves taking out the white blood cells, engineering them to specifically target the tumour, then reintroducing them to the body.
The two leaders in the field, Kite Pharma and Juno Therapeutics, were both acquired by large firms over the past year. The technology is amazing – and just getting started.
Gene therapy is coming of age, too. The first companies were going public in the early Nineties. In December last year Spark Therapeutics got the first approval from regulators.
Alzheimer’s is an area that will heat up over the next year. It’s the most controversial, which I like as it means there is not a consensus. This presents opportunity.
There has been interesting data from big companies about a new type of antibody treatment. The hypothesis is almost a religion in Alzheimer’s: you buy into it or you don’t, and scientists are split. I’m cautiously optimistic, although it won’t be a complete solution.
Healthcare is in the political cross hairs. James Connington speaks to a manager who invests at the cutting edge
Politicians are always the biggest risk, as t they’re unpredictable. Healthcare is a always a popular agenda item and pol politicians aren’t always rational, as the they’re short-term oriented.