December 18, 2014
It’s good to be back! – covering interesting companies in a sector that’s showing real signs of improved fundamentals since my last equity research report, which was published 4 years ago. Glad also that I’ve landed at Bloom Burton, re-joining a group that was active, and in many cases, pivotal, to introducing investors to a number of previous winners in the Canadian healthcare sector. The tireless hunt for the next Arius Research, YM Biosciences, Medicago and Paladin Labs continues!
Healthcare, and in particular biotechnology, has been the strongest performing sector in the United States in three of the last seven years, and is headed to make it four of eight based on year-to-date 2014 returns. Since 2007, the NASDAQ Biotechnology Index (“NBI”) has increased almost 300%, handily beating the Dow, S&P 500, NASDAQ Composite, and even the NASDAQ-100 Technology Sector Index (“NDXT”), which posted gains of 113% over the same period. Even during the financial crisis of 2008, the NBI outperformed, demonstrating that the sector can resist negative macroeconomic factors better than others, due in part to regular clinical and regulatory value drivers, positive demographic trends, and the defensive nature of healthcare in general.
In Canada, the specialty pharmaceutical sector has taken flight – capitalizing on a cycle of product portfolio rationalization by big pharma, and tax optimization strategies available to companies domiciled in this country. On the biotechnology side, I have seen better mechanistic rationale for drugs, better pre-clinical and clinical programs, and better commercial strategies than last time around. And, for the first time, all of the companies in my coverage list are funded to at least their next major inflection point by our estimation.
I am excited to find the next “undiscovered gem” in Canadian healthcare, and look forward to reporting my findings to investors.