Investment managers have highlighted the areas of opportunities within vaccines, specifically the advance in technology and opportunity to improve health equity as key areas of investment in 2024.
As ESG Clarity’s global outlook for 2024 recent highlighted, healthcare has been earmarked as an area of focus by fund managers this year. This coincided with an overriding agreement that the climate crisis is a health crisis at the annual World Economic Forum (WEF) in Davos in January. A report released by WEF suggested by 2050 climate change could cause 14.5 million deaths and $12.5trn (£9.8trn ) in economic losses around the world.
When discussing this with investment professionals focused on healthcare, ESG Clarity found many managers were focused on investments in vaccines to mitigate the health crisis in areas most impacted by climate change, while also boosting returns.
Head of healthcare private equity at AXA Investment Managers Alts, Dr Curt LaBelle, commented investors need patience but will reap the benefits: “Endemic viruses are spreading to new areas, and novel mutations are surfacing. To combat this, we must position the industry for rapid response to viral threats that are unknown today. To do so requires a lens of delayed gratification, and the belief that investment today will better position the world of tomorrow. This can be very difficult in a world driven by surety of returns and visibility on product profiles, addressable markets and timelines.”
He added funding vaccine innovation is “critical to ensuring global health security” and urged investors to support the “launch of rapid vaccination campaigns to proactively prevent, or quickly react to, an emerging viral threat”.
Improving health equity
Commentators also added investing in vaccines also plays a part in the ‘just transition’ as it improves health equity across the globe by aiding the distribution of vaccinations to lower income countries.
Investment manager of Castlefield’s Sustainable European fund, James Buckley, pointed to one company in the portfolio that supports this; Sanofi, a French healthcare company that provides affordable treatment for diseases such as polio, malaria and tuberculosis.
Buckley said: “The Sanofi Global Health Unit provides access to a broad portfolio of medicines across several therapeutic areas in 40 countries with the greatest unmet medical needs while funding local support programmes. This includes developing effective healthcare access models to deliver vaccination programmes in some of the world’s most vulnerable countries for medicines considered essential by the World Health Organisation (WHO).”
LaBelle highlighted a recent investment in LimmaTech Biologics, a Swiss biotech developing a platform for the identification and development of vaccines to combat the growing antimicrobial resistance epidemic.
“The company is developing a pipeline of vaccines to prevent increasingly untreatable microbial infections, and their lead programme is for the prevention of shigella, the leading bacterial cause of diarrhoea and the second leading cause of diarrhoeal mortality among all ages,” he said.
“Shigella is spread via food and water and recent data supports the relationship of higher temperatures and higher precipitation levels with the spread of shigella: with more rain and more heat, shigella spreads more. As climate change increases frequent extreme weather such as floods, heavy rains, hurricanes and tsunamis, there is likely to be increased contaminate of drinking water and surfaces, leading to more disease and disease transmission.
“As a result, Limmatech’s vaccine approach would provide a preventative vaccine for shigella and reduce reliance on the use of antibiotics that are no longer effective against emerging shigella strains,” LaBelle said.
Opportunities in technology
Innovation in the healthcare sector, particularly in the vaccine space, is also another attractive area for fund managers.
LaBelle said companies’ “ability to quickly identify, develop and validate a novel vaccine for a new viral threat” was key in their success, while the use of “new technologies to enable easier, faster and cheaper administration of vaccines that complement the current selection of available vaccines to combat emerging viral threats” was also paramount.
Further, LaBelle highlighted the importance of investing in “areas of genetic sequencing, host-response characterisation, and novel drug mechanism of action and delivery technologies” that accelerate vaccine development.
Investment manager within the Liontrust sustainable investment team, Laurie Don, also commented on the use of technology to drive vaccine research and development saying: “In the world’s fight against the Covid-19 pandemic, scientists pushed the development of the next waves of vaccine technologies, using genetic mechanisms such as messenger RNA.
“Our team holds investments in companies such as Thermo Fisher Scientific and Lonza that support technologies to develop and manufacture vaccines at scale. In the future, we’d expect such benefits to be reproducible, meaning the development of preventions for many more diseases, even including cancer, and at a much faster rate.”
Further, Castlefield’s Buckley added Sanofi uses data science to make more effective vaccines. He said: “As pathogens change, Sanofi uses AI to collect and analyse huge data sets to stay ahead of the efficacy curve. Sanofi invests in both the technology for AI driven vaccine development and localised medical access programs in underserved countries as well as return significant capital to shareholders.”
