Tuesday, July 28, 2015

Why Byron Wien's "Smartest Man In Europe" Says You Must Have Exposure To Biotech

In our July 2nd post, "Blackstone's Byron Wein On The Only Way to Make Serious Money" the linked Barron's article had a couple sentences that were definitely worth the price of  admission:
...But if you want to make real money investing, you will have to do it by picking stocks in technology and biotechnology, and I would emphasize the latter. 

“Most people still don’t recognize the gigantic implications of this phenomenon. Major breakthroughs are going to be taking place in cancer, heart disease, Alzheimer’s, diabetes, multiple sclerosis and other diseases. Picking the right companies can produce impressive returns in a difficult overall market environment. Right now there are literally hundreds of small companies working on significant products. Many of them will fail, but a few will change the world the way Google and Facebook did....
Mr. Wien is Vice Chairman of Blackstone Advisory Partners and is about as far from a wild-eyed speculator as you're likely to find. His friend sounds even more grounded, if that's possible.

Here's an example of what "The smartest man in Europe" is talking about, from Quartz:

The staggering success of Gilead’s hepatitis drugs, in one chart
When Gilead paid $11 billion for Pharmasset in 2011, it was seen as a risky move. Now, it’s clearly one of the biggest biotech steals in many years.

Gilead announced today another quarter of blockbuster sales for its extremely effective Hepatitis C drugs Sovaldi (the reason it acquired Pharmasset) and Harvoni, a once a day combination of Sovaldi with another drug. Sales rose 26% from a year ago to $8.24 billion, more than half of which came from those two drugs. Net income was $4.49 billion.

The rise of these drugs has been nothing short of meteoric. For the past two quarters, Harvoni alone has outsold AbbVie’s Humira, an anti-inflammatory drug that had been the world’s best seller for years. When you combine Sovaldi and Harvoni together, it’s not even close. They’re the top selling new drugs in the history of the industry:...MORE
 That just one disease with an estimated 29,718 acute cases in 2013.
(granted there are 2.7 million chronic infections, the majority of whom are baby boomer with the money to handle co-pays but still)