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Biotech: fighting diseases with precision medicine

November 2017

Biotech companies are developing drugs designed to eradicate diseases with an ever increasing precision.  

A whole new generation of medicines is about to claim a spot in the spotlight. These drugs will offer treatment or sometimes even a complete cure for diseases that are still chronic or fatal. In recent years, the medical world has already seen a preview of what is yet to come.
A striking example is the way a certain treatment may cure hepatitis C within a couple of months. Five years ago, this disease was an incurable viral infection that could have severe and fatal complications.

Breakthroughs with drugs against other ailments appear to be around the corner. 

For example, advances in genetic analysis are paving the way for more precise therapies in oncology. The cells in our body mutate frequently. In most cases they either do not pass these mutations on to their offspring, or they die. These alterations are transitory. However, some mutations are passed on and result in different cancers. A new drug was created. It aims to prevent cell mutations in the specific case of TRK (Tropomyosin Receptor Kinase) cancerous mutations. If approved, this therapy would mark a major step toward treatment based on a patient’s or the cancer’s genetic traits, unregarded whether the disease originates in the lung, breast, or elsewhere. Biotech is at the heart of medicine innovation. ‘It is no coincidence that both medicines referred to above have been developed by biotech companies’, says Marie-Laure Schaufelberger, product specialist. ‘This industry is at the heart of medicine innovation.’

No doubt biotech firms are attracting a lot of attention. But what are the risks for potential investors?

While biotech companies garner more attention, investors looking to benefit from the opportunities within this space should be selective. It is extremely risky to buy only one or a handful of companies holding a promising medicine in the pipeline. You need a lot of expertise to invest in this area.
Of every 10.000 new drug discoveries that go into development, only one will enter the market. Even if a medicine makes it into clinical trials, there is still a chance of four out of five that the drug will not be launched, hampered by potential side effects or insufficient demonstration of effectiveness. Despite the fact that some drugs have the potential to grow into blockbusters with massive revenues each year, the growth in the amount of new medicines that make it to the market is under pressure. The number of biotech drugs that have gained FDA1 -approval more than doubled to 45, between 2010 and 2015.2 However, in 2016 only 22 new biotech drugs made it to the market. The bar is getting higher, although companies that succeed in launching a new product look upon a bright future. According to Schaufelberger, Pictet Asset Management regard the way biotech companies are fighting diseases with precision medicine as a good example of how to invest. ‘Our investment strategy in this area is fairly similar. With great precision we seek to identify companies that hold products in their pipeline with the potential to really make an impact in the near future.’ Expert selectivity is key.

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