Why small biotech stocks are the best choice for big returns

Each week, a professional investor tells us where he’d put his money. This week: Carl Harald Janson of the International Biotechnology Trust selects three potential acquisition targets in the biotechnology sector.

Sales at larger biotechnology firms are stalling as product growth slows and firms face increasing price pressure. We think better investment opportunities exist in the small- and mid-cap universe.

These smaller companies will drive growth in the biotechnology sector, as they are developing drugs for unmet medical needs, such as dementia or cancer. The increase in efficiency in research and development came to fruition in 2017 with 46 new drug approvals in the US the highest number in 20 years. Many of these new drugs originate from small and medium-sized firms.

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Carl Harald Janson is investment manager of the International Biotechnology Trust.