Quick quiz question: Where does all the medical innovation come from? The conventional answer is the United States. But while the U.S. does create a lot of the breakthroughs—it has a longstanding venture capital establishment that funds biotechs, an advantage over the rest of the globe—other nations, especially in Europe, are gaining ground.
For investors, this is important, because healthcare is the hands-down leader in the stock market. For the 12 months through last Friday, the S&P 500 health sector has generated the best returns, 15.6%, handily beating out the hot information technology space, at 12.6%.
Fortunately, many European life science companies have shares listed in the U.S. European healthcare powerhouses include Britain’s AstraZeneca (it has a bevy of cancer treatments in its pipeline, and the stock has risen 31% over the past year), Switzerland’s Novartis (heart failure and psoriasis, up 10%) and Roche Holdings (cancers, 21%), plus Denmark’s Novo Nordisk (injectables, 10%).
Yes, time was that the U.S. had the medical innovation realm pretty much cornered. But there’s an upsurge in research and development that no longer can be confined within one country. U.S. venture investors are increasingly looking at European biotech firms, which benefit from a strong university system. And Europe is developing its own VC capability.
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So a biotech renaissance is afoot in Europe. Thanks to increased medical innovation and aging populations, the life science companies’ products are in high demand. Finding a cure and a vaccine for COVID-19 only heightens their investment desirability.
Well-heeled non-medical European behemoths are increasingly getting in on the health action. Germany’s Robert Bosh, for instance, best known as a tech company specializing in autos, has started a healthcare division. Bosch Healthcare Solutions has announced that its existing diagnostic device, Vivalytic, which is used for flu and sexually transmitted diseases, can also be employed to test for COVID-19.
The test, it contends, takes just a little more than two hours to yield results. And European health giants are shopping in America. In 2009, Roche bought Genentech, a U.S.-hatched pioneer in recombinant DNA technology. In 2015, AstraZeneca purchased ZS Pharma, which focuses on kidney and cardiovascular treatments.
What’s refreshing is that healthcare innovation now has no more borders. At a time of push-back against globalization, this is one powerful crosscurrent that can benefit humanity overall—and investors in particular.
A perfect illustration of borderless life science innovation is a French company called Tissium, which uses polymers in tissue reconstruction. Scientists at Harvard and Massachusetts Institute of Technology invented its product. The application is now before the U.S. Food and Drug Administration. Once an FDA approval is in hand and the company can boast a product portfolio, Tissium plans to go public. Right now, it receives funding from France’s BNP Paribas and others in Europe and Asia. In November, these investors ponied up an extra $42 million for Tissium.
“Innovation is global now,” said the company’s CEO, Christophe Bancel, an engineer who also studied molecular biology. He founded Tissium in 2013, and with offices in Paris and Boston, is targeting the U.S. as its primary market. “It’s the biggest market globally, and always central to our plans.”
Tissium employs polymers, synthetic material akin to plastic that is formed via complicated molecular construction. The aim is to revolutionize tissue repair by making it quicker and less painful for patients.
One application is a sealant that substitutes for surgical sutures, which are prone to leaking. It even can be used inside the body to hold an artery together. In addition, it can repair damaged nerves. “Our polymers are small implants that help the body heal after surgery by bringing tissue together,” Bancel said.
Originated in the U.S., made in France and available globally. More and more, that’s the picture of medical advances that know no nationality.