Insights   |   October 14, 2024

Fiera Apex: Our Approach to Biotech Investing

Healthcare remains one of the largest and fastest-growing sectors in the U.S. economy. We see the sector’s prolific innovation, resilient demand, and support from long-term demographic trends and fundamentals as providing long-term drivers for continued growth.

National health expenditures are projected to continue outpacing average Gross Domestic Product (GDP) growth, accounting for 17.3% of the economy in 2022 and expected to reach 19.6% of GDP in 2031.1 Driven by accelerating scientific discovery and innovation, combined with macro tailwinds, healthcare – and biopharma (i.e., biotechnology and pharmaceuticals) in particular – has emerged as one of the decade’s most attractive and successful investment areas.

Since 2015, the proportion by market cap of biopharma names in the Russell 2500 Growth Index2 has grown from 8% to almost 12% in 2024, making it one of the largest Industry groupings within the index. The increasing presence and outstanding returns makes ignoring biopharma increasingly difficult, particularly for active strategies benchmarked against the index. However, the prevalence of binary outcomes in this industry provokes a need for a thoughtful approach to identifying investments and minimising risk. The Fiera Apex team’s investment process is attuned to navigate exactly this scenario, identifying the top-down secular trends providing tailwinds to growth in combination with bottom-up fundamental research to qualify buy candidates.

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