The life science sector has continued to grow faster than the overall market over the past ten years and might well be poised to take over the market leadership from technology.
Every year around October, Julius Baer gathers its senior asset management and research experts to discuss long-term economic, financial and social trends. The resulting analysis and conclusions are summarised in our annual report titled ‘Secular Outlook’.
Last year’s gathering was particularly interesting, as we made an attempt to accurately forecast the drivers and leaders of the new decade. What we were leaving behind was a US technology-led bull market, similar, in some respects, to the booming 1990s. Keeping in mind that market leadership change doesn’t happen overnight and is a long-term process, the ultimate question in the room was: ‘Who will be the leaders of the 2020s?’ While candidates were plenty, going from AI and cloud computing companies, to themes like the rise of China and sustainability, strong arguments pointed us in the direction of the biotech sector.
Life science disruptoion
Even before Covid-19, gene-based therapies were positioned at the intersection of cutting-edge healthcare innovation, big data in medicine and unmet medical needs with high return potential.
As healthcare costs are placing a rising burden on consumers all over the world, digital technologies have increasingly been adopted across the healthcare industry. These innovations, along with other structural trends, have been pushing life expectancy upward and changing lifestyles in fundamental ways. This has a direct impact on how we manage our money and make investment decisions.
Covid-19 has further accelerated the digital disruptions that we have been observing in the life sciences area.
Healthcare leadership after Covid-19
While no one could have foreseen the sudden emergence and rapid spread of a deadly virus, Covid-19 has further accelerated the digital disruptions that we have been observing in the life sciences area.
Now we have entered a phase, where, on the one hand the priority remains on finding rapid and effective responses to the challenges the virus poses. On the other hand, the future of the industry – and humanity at large – depends on our collective ability to best understand what the new normal will look like, and come to terms with the challenges and opportunities it brings.
One thing is clear: The pandemic reminded us of the role that healthcare plays in the grand scheme of things – and by extension, that it deserves the attention of investors and a place in their portfolios.
From the long-term perspective to short-term explanations of what is going on in the economy and markets – our Group Chief Investment Officer shares his views.