An upsurge in investor demand for healthcare and biotechnology stocks in the wake of the coronavirus pandemic has been likened to the heady days of the ‘tech boom’ in the late 1990s by one broker.
Andy Thacker at Turner Pope Investments told Proactive that the demand for healthcare stocks among investors was reminiscent of the tech boom in the fact that “investors didn’t want to look at anything else”.
“There has been huge demand…People want to see COVID as a marker in the first instance but now that is preferred but not essential”, he said.
“There has been acceptance that the whole healthcare space should be a beneficiary of the very public ‘love in’ with the NHS. The pandemic has also highlighted costs to the health service and the reality that investment has to be made in the sector”, Thacker added.
The broker also highlighted that the pandemic had raised awareness of the issue of an under resourced local healthcare industry.
“The question is can we find better medicines and pharmaceuticals more locally…I think there is a generic lift in the whole of the life sciences space now. There is a realisation that we are under-resourced at a lot of medical areas”.
Thacker added that the upswing in healthcare is likely to continue even after the pandemic has subsided.
“COVID is just one illness…There could be many more from the virus so I don’t think anyone is going to rest on their laurels…Although the level of reaction might reduce”.
In terms of specific focuses, Thacker said in the early months companies were jumping on the “COVID bandwagon”, but whether firms can retain the same level of interest is now likely to depend on “tangible results”.
“If you could put COVID in your investment story, you could name your price”, he said, however this peak has since receded and the market is now in the “show me what you’ve got” phase.
“There is a lot of choice out there across lots of markets for firms in the ‘COVID’ space, so companies will have to show they can make progress because people will not wait…Investors are a lot smarter these days and the money is a lot more nimble”, he added.
Comparisons to the late 90s ‘tech boom’ do not seem to be that far from reality, with biotech groups, particularly among small caps, seeing their share prices surge over the last six months as investors scrabble to ride the wave of efforts to treat and possibly cure the coronavirus.
The company recently reported positive results from a clinical trial of its drug SNG001, an inhaled formulation of interferon beta designed to help treat symptoms of coronavirus.
The firm has also looked to take advantage of its recent surge, raising £14mln in late March to fund the trial of its interferon-beta treatment.
In late March, Novacyt SA (LON:NCYT) was provided emergency authorisation by the US Food and Drug Administration (FDA) to deploy its test for coronavirus, just when the outbreak was accelerating in several western countries. Since then, the firm has secured a slew of manufacturing agreements as well as other deal relating to testing for the virus.