Biotech is relatively safe from macro factors. China, or interest rate hikes, or oil price fluctuations, these do not impact a patient’s interaction with a virus, or with cancer. So, investing in biotech is a good hedge against macro factors.
The biotech sector is driven by innovation and not macro factors. For example in 2014, when several risk assets came under pressure as the Federal Reserve began winding down its asset purchase program, the IBB returned 35.74%, almost three times the return on the S&P 500.
In the last one year, the FDA has approved a record number of drugs.
The so-called patent cliff is now over.
Biotech is becoming super-focused. A company like United Therapeutics is building itself on one indication, PAH or pulmonary arterial hypertension. Juno and Kite are making breakthrough discoveries in the CAR-T space.
Or take the NASH space, a $40 billion market with still no proper treatment. Many companies are competing, which one will succeed?