Riding a Wave of Biotech Innovation

07 March 2023 by National Bank Investments

Aging societies and emerging pathogens are contributing to growing global health challenges. Many illnesses are not adequately addressed by medicines today, and accessing effective therapies remains difficult for much of the population worldwide. Treating age-related and infectious diseases are key sub-targets within UN Sustainable Development Goal (UNSDG) 3: Good Health and Well-Being. AllianceBernstein (AB) shares their vision on how investing in biotechnology innovation with a responsible approach can provide concrete solutions to support this goal.

AllianceBernstein’s market outlook

Biotechnology in medicine has accelerated the development of “biologics.” Biologics are types of drugs made from living organisms such as blood, cells, or tissues to create new medications. They differ from usual drugs as they consist of larger and more complex molecules, as opposed to traditional smaller-molecule pills. Therefore, they are mainly delivered by intravenous or injections. Insulin, vaccines, and growth hormones are some examples of biologic medicines.

These types of drugs offer tailored treatments for diseases such as cancer and autoimmune disorders and make up a growing proportion of new medicines in development.

This sustained growth trend in biologics is accelerating thanks to enabling technologies like DNA sequencing and artificial intelligence that are turbocharging new drug discoveries.

Added value to the strategy

AB’s Sustainable Global Equity strategy invests in the “picks and shovels” providers of large-scale long-term growth trends that are shaping societies and addressing massive social and environmental challenges. The portfolio holds several key enablers for the discovery, development, manufacturing, and packaging of medicines.

For example, Danaher is a leading supplier of equipment used to produce biotechnology drugs at high volumes and levels of quality. ICON PLC provides clinical trial management services that help drugs reach the market more efficiently.

AllianceBernstein’s approach and vision

AB aims to achieve attractive returns by investing in companies that contribute to positive societal outcomes. Companies offering products or services that help to address the world’s biggest challenges, such as those laid out by the UNSDGs, benefit from investment opportunities in high growth themes and markets. Businesses that act as good stewards toward the environment, employees, and other stakeholders may carry less risk over time.

Case study

Further down the supply chain, West Pharmaceutical Services is a key provider of packaging components for biotechnology drugs, including syringes and injection devices. Many complex new medicines require highly sophisticated packaging to avoid destabilizing the drugs, posing a potential risk to vulnerable patients. As a result of their technical expertise and manufacturing scale, West reports that “virtually all” biologics in the Federal Drug Administration (FDA) pipeline are using at least one of their drug delivery mechanisms or storage solutions.

West manufactures over 45 billion high-quality components annually. The company strives to reduce the environmental impact from their operations, with specific goals around energy efficiency. West also developed novel injection devices that improve the ease of administering medicine, facilitating patient access to critical therapies.

SDGs contribution:

NBI Sustainable Global Equity ETF (NSGE)
NBI Sustainable Global Equity fund
Sub-advised by AlianceBernstein

Why invest in this strategy?

Long-term capital growth while following a sustainable approach to investing
Capitalize on attractive investment opportunities that have the potential to add substantial value.
Will not invest in companies that derive revenue from adult entertainment, alcohol, coal, weapons, firearms, gambling, genetically modified organisms, military contracting, prisons, or tobacco.

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