Are biotech company valuations warranted?

Sam Isaly, managing partner of OrbiMed Investors and portfolio manager of the Worldwide Healthcare trust, says strategically-driven M&A activity and leaps in scientific research are continuing to drive growth for the sector

Driven by secular tailwinds and advances in scientific research, the MSCI World Healthcare index has returned 10.74% on an annualised basis over the past ten years. In 2013 and 2014 alone the index returned 37.1% and 18.7% respectively.  To put the performance into context, the MSCI World index has managed an annualised return of 6.7% over the previous 10 years. Can companies within the global healthcare sector maintain the momentum? Investors remembering the sell-off of biotechnology stocks in March 2014, will be wary that as the index pushes ever new heights, a correction could be i...