Investors have increasingly focused on the healthcare industry due to the corona pandemic. We spoke to the physician Michael Fischer, founder and managing partner of Medical Strategy and also fund manager of the MEDICAL BioHealth-Fonds, about the industry and his approach. The fund, which recently celebrated its 20th anniversary, focuses primarily on healthcare companies that are highly innovative and dynamic in value growth. (Note: According to the factsheet as of September 30, the fund also includes the Austro-French vaccine developer Valneva).
Mr. Fischer, you launched MEDICAL BioHealth twenty years ago and recognized the importance of the sector early on. What drove you to set up the fund 20 years ago?
By the end of the 90s, it was already clear to me that innovative developments were increasingly coming from biotechnology and no longer from the pharmaceutical industry. It therefore seemed worthwhile to focus on medium-sized and smaller companies in particular, which have a broader pharmaceutical pipeline. And we have not changed this strategy to this day. We continue to rely on healthcare companies that enable better treatment with new substances and thus generate high growth; to a lesser extent, we also rely on pharmaceutical companies. Over the past few years, the know-how regarding the causes of diseases has risen sharply, we are in a broad and long-lasting innovation cycle. In the USA in particular, this increase in knowledge is optimally promoted by the willingness to provide a lot of capital. Today – in contrast to the 1990s – we have a more extensive selection of companies. We are currently invested in around 150 companies, 900 companies are in our database and are continuously screened.
In the research-intensive companies, some of which are not yet generating sales or profits, the volatility is sometimes very high. Are you protecting yourself here?
That makes less sense with these values because there are usually no instruments such as options on them. We therefore act with risk-adjusted weightings. Companies in the early phases are represented rather small. The more advanced the programs are, the higher we let the portfolio size grow. The fund’s approach is to support the selected companies over the long term in the phase of their strongest growth, because only in the long term can the companies develop their potential. Only the long-term thinking and thus strategic investor has the chance to participate in the potential.
The coronavirus has brought the issue of “health” to the attention of investors. How do you as an investor assess the pandemic?
On the one hand, the pandemic once again highlights the importance of the sector. On the other hand, investors are increasingly realizing that this is an absolute growth market. Recently, investors have focused very much on “classic” tech stocks, such as FAANG stocks. However, there are also other areas that structurally have very high growth potential. This clearly also includes biotech and emerging pharma.
In the past few months, so-called “Corona” bets have appeared again and again on the stock markets. Some of these stocks are badly hit. How do you position yourself here?
There are currently hundreds of companies around the world working on a drug to treat corona or a corresponding vaccine. It is currently hardly reliable to judge who will ultimately establish themselves. In the past few weeks, it has been observed in some cases that setbacks can still occur in late test phases. In addition, high social and moral pressure on prices can be expected. We do not expect such high profit margins in the Corona environment. We have therefore only added the topic to the fund.
You already mentioned that you are continuously evaluating around 900 values. This also requires industry-specific know-how and not just a feel for the capital market.
As a matter of fact! Our team is largely made up of natural scientists, for example molecular biologists. In addition, we have installed a medical advisory board and an extensive network and can therefore also assess how promising a new substance is. In MEDICAL BioHealth, companies that focus on innovative cancer treatment options, gene and RNA therapies as well as drugs against so-called rare diseases are among the investment focuses. You also need relevant experience for the assessment.
What do you see in the healthcare sector in the next twenty years?
Since health is one of the primary needs, as we are currently seeing again, I expect a very high level of willingness to develop innovative therapies. Most of the diseases are so far only suboptimal or not treatable at all. New diseases develop. Against this background, the healthcare sector will continue to show high growth potential in the next 20 years.
Text: Christine Petzwinkler
From “Börse Social Magazine # 46” – 1 year, 12 issues, 77 euros. Approx. 100 pages per month, approx. 1200 A4 pages
1. BSM # 46
Stocks on the radar:Semperit, FACC, DO&CO, Warimpex, Agrana, Telekom Austria, Austrian post, Erste Group, AT&S, Athos real estate, Addiko Bank, Andritz, Wienerberger, Strabag, Rosenbauer, OMV, AMS, Cleen Energy, startup300, Composite, SW environmental technology, Rather S.
The Vienna Insurance Group (VIG) is active in 25 countries with around 50 group companies and over 24,000 employees. VIG has been listed on the Vienna Stock Exchange since 1994 and is now one of the top companies in the “prime market” segment and has an attractive dividend policy.
>> Visit 58 other partners at boerse-social.com/partner
BSM # 46