28 April 2020
At GAM Investments’ Weekly Equities Meeting held on 27 April, Christophe Eggmann commented on political risk to the healthcare sector and discussed how companies are responding to Covid-19 challenges.
2020 is an election year in the US. Following the presidential primary election results on 3 March, dubbed ‘Super Tuesday’, Joe Biden is now the presumptive democratic nominee. This is a positive result for the healthcare sector in terms of political risk. The Covid-19 crisis has demonstrated the importance of remaining at the forefront of innovation. Any legislation in the US discouraging innovation would therefore be short sighted, in our view.
Overall, healthcare firms have been able to keep operations running, with little operating disruption aside from the medical devices and equipment sub-sector, which has been impacted by the postponement of elective surgery. Big pharma is performing well and for most it is more or less business as usual. Smaller biopharma stocks have been impacted with M&A largely on hold, but sector consolidation will return in our view.
Gilead’s Remdesivir will perhaps be the only potential remedy in the toolbox for Covid-19 for some time, at least until a vaccine is developed. If results are successful, Remdesivir would bring confidence and a feel good factor to the global population seeking a return to a more normal way of life. There are important studies, including a key placebo control study, set to be published on Remdesivir in May. However, until that time the jury is still out.
Source: GAM unless otherwise stated. The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a security is not a recommendation to buy or sell that security. The companies listed were selected from the universe of companies covered by the portfolio managers to assist the reader in better understanding the themes presented. The companies included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. April 2020