Why now is the right time to invest in biotech

The biotech sector holds huge potential for investors, with strong growth and attractive valuations. Here's the best way to play it.

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We are living in a golden age of innovation in medical sciences. Biotech companies focused on the development of new medicines have long been recognised as a dynamic and promising investment area, offering life changing treatments for patients and secular growth for investors. The Nasdaq Biotech Index has outperformed the S&P 500 in 17 of the last 30 years, with biotech companies responsible for the majority of new drug approvals over the last decade.

The biotech sector came to the forefront of public awareness during the COVID-19 pandemic with the rapid development of vaccines, highlighting the sector’s capacity for innovation. Since then, macroeconomic factors, such as high inflation and interest-rate hikes, have acted as headwinds for the sector. However, we believe that it is now emerging from these challenges with strong secular and cyclical growth and attractive valuations, making now an attractive time for investors willing to navigate short-term volatility in exchange for considerable long-term growth potential. So, what are the tailwinds for biotech at the moment?

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