Innovation is key in the healthcare sector, and the best results are not always secured by giants like Novartis and Roche.
Speaking to Citywire, Daniel Häuselmann, head of Swiss equities at GAM, explains that he has 40% exposure to healthcare in his JB (CH) Swiss opportunity fund. He also maintains an overweight to Molecular Partners – a biopharmaceutical company which flies below the radar of many investors. And with good reason, too: it's all part of his plan to capitalise on their innovation.
The Citywire AAA-rated fund manager is particularly interested in one product Molecular Partners has in the pipeline: Abicipar, a drug that aims to improve eyesight.
‘Since the IPO there haven't been any big problems or disappointments with Abicipar. The company had some issues during trials years ago but now everything is on track and the launch of product should be in 2020.’
The fund manager also said that another advantage of Abicipar is the frequency of application. Injections have to be made in the eye, which means the fewer you need, the better.
‘Lucentis – owned by Roche and Novartis – you have to inject in the eye each month. Then Regeneron’s Eylea was launched and had to be injected every two months and could get a dominant market share by this differentiation. Abicipar should be injected only once in three months, which is clearly a benefit.’
He said Molecular Partners also leads the way when it comes to innovation, with a new oncology product – MP 250 – in phase two trials.
‘It works in a similar way to Avastin but also offers some additional benefits and is a very innovative product, which is crucial in pharma.’
Meanwhile Häuselmann has no exposure to pharma producer Lonza, despite the hype around the name.
‘I have quite a big weight in healthcare and have to skip some names as a result. Lonza performed really well but I don’t think it will perform much better than big pharma. Most probably, investors are a bit too optimistic after the shares had a very good run.’
Another prominent overweight in the fund is industrials, with 19.4% exposure. One of the stocks that contributed to the positive performance is Interroll – a manufacturer of products for unit-load handling systems and internal logistics.
‘The company has high margins, which allowed us to reinvest into their business in order to grow globally. Historically this company had most of its business in Europe but now it has a global footprint and is expanding in Asia and South America.’
Häuselmann said Interroll installed SAP systems globally and is now able to produce any product, anywhere in the world with the same data.
‘Whether it caters to Amazon or the Brazilian post, this company can ensure that clients are getting the same quality everywhere in the world. There are no other competitors who have such a global footprint.’