Future ETFs Part 3: Biotechnology & Pharmaceuticals
20 July 2018 | World Views | Ricki Allardice
 


Also Read: Part One | Part Two

The opportunity to invest in industries which completely disrupt the market are few and far between. Furthermore, the ability to identify these opportunities is a skill which few people possess. This means that the vast majority of investors miss the boat when it comes to investing in industries which deliver life-changing returns. In this article I will detail the next major breakthrough in medical technology which has the potential to effectively cure cancer.

"...major breakthrough in medical technology which has the potential to effectively cure cancer..."

As a scientist myself I have been following this technology for the last 5 years, and the results shown in many trials have been nothing short of astonishing. The associated technology has finally reached the market and we anticipate huge upside potential.

The pharmaceutical industry is well known for being highly profitable over the long term, as global demographics point towards a growing population and longer life expectancy as a result of widespread availability of medical care. It becomes a positive feedback loop for the pharma industry because an ageing population requires proportionately more medical care than a younger one. That being said, the industry is highly competitive one. Several new developments are poised to revolutionize healthcare in a way not seen since the advent of anti-biotics. Companies that are positioning themselves to lead the charge in bringing these new technologies to market stand to gain market share and deliver outsized returns to their shareholders.

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Figure 1. The pharmaceutical industry has returned fantastic gains over the past ten years.

CRISPR

The acronym known as CRISPR (pronounced crisper) stands for Clustered Regularly Interspaced Short Palindromic Repeats. In layman’s terms, it means that scientists are now able to change your DNA.

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Many diseases are caused by the expression of mutated genes contained within the human genome. These diseases may be a result of genetic mutations arising at birth, or from environmental stimulations such as smoking. However, until now the only treatments for them have been to alleviate the symptoms, with no ability to address the root cause of the illness. For example, cancers are caused by the expression of irregular proteins, which reproduce unchecked. This is as a result of a gene mutation. CRISPR technology offers the potential to remove the mutated genes and replace them with the originals.

China is leading the charge in terms of CRISPR research, with clinical trials on over 80 human subjects which started earlier in the year. Research labs all over the world are working on this technology at a furious pace, and as a result, a number of listed companies are developing a range of CRISPR related treatments.

There is a clear diversion from previous medical dogma, where drug research was focussed on the population level rather than the individual. CRISPR allows for the development of a treatment specific to the individual. This is a revolutionary moment in medical history.

There are a number of companies which are solely developing CRISPR treatments, but all are still in the listed small-cap sector. The listed large-cap companies in the pharmaceutical space are jumping on board at a rapid rate either by partnering with small caps that are developing treatments or by establishing their own research programs.

CRISPR technology is still in its infancy. Taking a punt on an individual stock which is devoted to developing CRISPR treatments is a high risk/high reward play. If you would prefer a less risky approach, we would recommend that you look towards a number of pharmaceutical ETFs, which are invested in a basket of companies. This way you will gain exposure to the technology without taking excessive risk.

 

The best way to participate in the long term growth opportunity of these ETFs is by opening an offshore account with our trading desk at Sharenet Securities, which offers the most comprehensive offshore research and trading platform in the market.

Medical Marijuana Derivatives

The second revolution in medical science which is currently underway is that of Cannabinoids and other Cannabis-derived compounds. In our article last week we spoke about investing in the Marijuana industry. A large component of this industry is focussed on the medicinal applications of the plant, which hold potential to be extremely lucrative in the future.

There is a wealth of research that suggests there are significant medical benefits to be derived from the plant and companies are scrambling to bring new drugs to market as soon as possible. Once again, we would suggest investing in an index rather than the individual stocks, as the industry is still nascent. The upside to holding the index means that you gain exposure to both recreational and medicinal marijuana investments. For more information on this topic, please read our Marijuana industry article.

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Figure 2. The Marijuana industry is still very young, but has returned over 100% in the past year.

Sharenet Securities offers you the unique ability to gain access to all of our research in these fields as well as the ability to invest in them. Should you wish to diversify your portfolio to include both of these industries, please contact us today and we will set up a trading account for you. As the account is domiciled offshore you are hedging yourself against a weakening rand, which under current economic conditions may be a prudent investment diversification decision. The minimum account size starts at R100 000.

 

Also Read: Part One | Part Two


Ricki

Ricki Allardice

Ricki specializes in the field of wealth management with a focus on holistic financial planning. He has a keen interest in the investment fields of property, technology, precious metals and cryptocurrencies. Ricki also holds a Masters degree in Science from the University of Stellenbosch.


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