Axa Fram (page2)-----30 Oct 2015 16:11
Stock picking
Despite the noise coming out of the US regarding the high costs of medicine, Thomson is not preparing to reappraise her portfolio in the event of a cap on prices being introduced across the Atlantic.
She believes it is business as usual thanks to her stock picking strategy and a belief that pricing regulation will have less of an impact on the revenues generated by biotechs with strong investment cases.
‘One thing is for sure, companies that deliver innovation and therapeutics to patients that have no other treatment option will still be able to charge premium pricing.’
She adds that drug companies will have to justify why they are charging so much for their treatment, which will be difficult if their drug is in a competitive market. This is why AXA Framlington Biotech focuses on biotechs that enjoy pricing power because they are bringing new medicines to market that solve a particular problem for the first time. Biotechs are more likely to achieve this than speciality pharmaceuticals as they invest more in R&D and innovation.
A stock’s clinical data is also considered as it could point to the probability of a treatment reaching the market and the potential revenues it could generate by looking at the size of the market and how strong the competition is. When it comes to large caps she looks at the market dominance of their existing drugs and the potential of the candidates in the pipeline.
Meeting management is another part of the due diligence process. ‘That is equally, if not more, important for small caps where their execution for getting their one or two products to market is crucial for the success of the company,’ she says.
Of the 300 to 400 companies in AXA Framlington Biotech’s investable universe the fund is heavily skewed towards North American stocks, which represent more than 85% of the portfolio with the remainder scattered across Europe. Its ten largest holdings include names from both sides of the Atlantic, but all are listed on NASDAQ, a sign that US investors are hungry for a piece of what is a high risk, high reward sector.
The fund also invests in pharmaceuticals as well as healthcare technology and service providers, but biotech is the core interest representing more than three quarters of the fund.
Playing the market
Thomson believes a scientific background is essential when it comes to investing other peoples’ money in biotechs. She studied medical microbiology – the prevention, diagnosis and treatment of infectious diseases – at Edinburgh University. She joined the healthcare team at investment bank Goldman Sachs (GS:NYSE) when she graduated as her work in the lab during her studies led to the realisation that looking at test tubes for a living was not for her. She joined AXA Investment Management’s healthcare equity desk in 2011, a year before taking the reins at AXA Framlington Biotech.
The fund’s objective is to provide long-t
Sign In
Follow the stocks
