Belgian biopharma offers opportunities for investors

Megatrends such as population ageing, climate change or the ever-growing importance of data are at the heart of a new 'thematic investing' series developed by the asset manager KBC Asset Management. These trends will fundamentally shape our society and hence our economy in the coming decades. To make thematic investing feel more relevant, companies are clustered according to their societal role, such as healthcare and health - a more defensive sector that is once again drawing the attention of many investors in these times of stock market uncertainty.

Biopharma companies, where the focus is on drug development, warrant investors' attention. Whatever direction the economy takes, medication remains much needed. 'Biologics already account for a third of total drug sales today. And the potential is huge, simply because biopharma is supported by megatrends such as an ageing population and technological innovation', says Liesbeth Van Rompay, financial analyst at KBC Asset Management.

'The biggest advantage of biologics is that they are more specific and therefore have the potential to work better, with fewer side-effects, compared to chemical drugs. The production process is more complex, expensive and longer, but the structural variation we see in biologics also means they are better protected against generic competition. That benefits the manufacturer, and therefore also the investor.’

Belgium is a particularly player in biopharma, playing host to the leading biopharmaceutical companies. And with the production and export of more than 700 million coronavirus vaccines, Belgium has more than confirmed its leadership and expertise in health and innovation. That success is the result of many years of investment in research and development. Value is created by innovating.

Belgium also has a strong support ecosystem that connects the big names in pharma as well as smaller players, academia and government. Add a large pool of talent, nurtured by 12 universities and seven university hospitals, plus impressive expertise, and you can see what makes our country so attractive for investment.

It is possible to invest in biopharma through individual stocks. This allows the investor to choose one specific company. The downside is that there is little or no risk diversification. That risk is not negligible, especially in smaller biotech companies with a limited number of products in the pipeline. They can go up, but also down.