Finding Valuable Biotech Investments in New Places

Biotech investments hold potential for great returns. Do enough research, find a startup you truly believe in, and watch them create an effective and safe product that gets FDA approval, and you may be looking at a positive for your portfolio. 

Each potential investment is part of a fairly large pie, with the industry currently valued at $140.8 billion and projected to grow another 2.2% in 2022.  But that doesn’t mean biotech investments are a sure thing. Far from it, as a matter of fact. Companies face a lot of competition. They also face stiff regulations and must adhere to strict approval guidelines when developing products. Those approvals require a great deal of time and patience. And to top it all off, the whole process requires a healthy amount of capital for R&D, testing and those pesky approvals, and finally marketing once a product can be offered to consumers. 

That last part is key and it’s where you, the investor, come in as an integral part of the equation. Because biotech startups can’t simply rely on great ideas and luck to succeed. The level of financial support an individual company receives — as well as the entire industry, for that matter — is what fuels innovation and creates positive change for society.


Hitting the Pharma Jackpot: M&A 

Many biotech and pharmaceutical companies hit their big payday with M&A deals that shake up the industry or keep it going strong. 

In 2021, the average pharma M&A deal was valued at $1.7 billion. As big of a number as that is, it was actually the lowest average sum since 2012, with a historical mean in the industry of $4.3 billion. Approximately one-third of the year’s 92 M&A deals topped $1 billion, and the biggest of them all was a doozy — a solid $11.7 billion purchase of Vifor Pharma by Australia’s CSL Ltd. Undoubtedly, Vifor board members and shareholders celebrated with their fair share of champagne after hitting that jackpot. But those investors represent a significant minority of the larger population, having found a proverbial needle in the market’s haystack.  

While these stories are fun to learn about, they’re also opportunities to remind ourselves this isn’t gambling, it’s investing. And that means value-seeking investors don’t just rely on hitting a big jackpot to give their portfolio a jolt. So where are some not-so-obvious opportunities to find value and profits in biotech? Consider these approaches: 


Consumer Products for Pets are a Hidden Value Move (PetVivo) 

Many pharma products in development never even make it to market due to rigorous approval processes. Years of research and development can go down the drain or sit in limbo while waiting for the almighty FDA nod. 

Do you know whose products don’t require the same level of scrutiny and safety approvals? Look no further than man’s best friend. FDA premarket approval and clearance is not required for medical devices used in veterinary medicine, clearing a more efficient path to market launches and eventually, profits. This is good news for businesses and investors looking to get a piece of the $11 billion pie that makes up the veterinary care and product sales market. 

Veterinary medical devices and medicine have great value for an obvious reason: people care about their pets. They care about them enough to spend $103.6 billion on pets in the US alone in 2020, as a matter of fact. And seeking help for common ailments that impact our pet’s quality of life is just as important to consumers as seeking care for any other member of the family. 

Take osteoarthritis, for example, which affects 14 million adult dogs and 1 million horses, according to the Morris Animal Foundation and American Horse Council. Common treatments to alleviate the pain and inflammation include NSAIDs (anti-inflammatory drugs), steroid or hyaluronic acid injections, and even stem cell treatments, all of which have their own drawbacks, from high costs to limited long term effectiveness. The veterinary biotech and biomedical device company PetVivo Holdings (NASDAQ: PETV) has addressed this with Spryng, a unique medical device that supports the cartilage barrier with a biocompatible lubricous cushion. The device treats the root of the ailment — deteriorating cartilage — rather than simply pacifying the pain for short periods, like most methods of treatment. With an annual owner cost of $400-$700, PetVivo has an attractive value proposition for consumers because it is generally less expensive than any of the aforementioned treatment options. 

But the company isn’t a one trick pony. The true potential value lies in their portfolio of US and foriegn patents (19 in early 2022), and with 17 other products in their development pipeline, their freedom from FDA premarket approval provides a wide path to future value. 


Broaden Your Horizons: Explore the Wellness Niche Market (BFYW) 

All this talk about biotech makes it easy to focus on pharmaceuticals. But there is a massive, massive market within arm’s reach of that: Wellness. 

Consumers segment the wellness market into six different categories, comprising $1.5 trillion in value from health-, fitness-, nutrition-, appearance-, sleep-, and mindfulness-target products and services. The products portion of those categories make up 70% of consumer spending, proving that healthcare isn’t just reserved for doctors visits, trips to the pharmacy, and treating ailments with prescription drugs. In fact, many people look to avoid those three things altogether by investing in their overall health and wellness with proven, over-the-counter products marketed for wellness. Consumers buy these products now more than ever, and data suggests that trend will not slow down. 

Accordingly, US-based Better For You Wellness (OTCQB: BFYW) seeks out the products and brands prepared to make an impact within this niche. This approach can be a profitable one, which isn’t just supported by the aforementioned $1.5 trillion market. It launches the company into a market that is inherently diversified, and how many investors don’t love the sound of that word? In 2021, Better for You Wellness announced its first LOI, setting it up to acquire Ironwood Clay Co, along with plans to acquire Mary Louise Cosmetics, as well as Cannuka. All three acquisitions pursue various aspects of skincare, including Cannuka’s CBD-infused skincare products. That also means an array of distributors and brands are connected to Better for You Wellness, giving the company a deep footprint in the industry.  

You can stumble onto companies (and opportunities) like this simply by expanding your typical biotech watchlist and exploring a niche like wellness that is bubbling with value. 


Remember, Healthcare Is a Business.

Again, thinking slightly out of the box can dig up incredible potential. We all rely on biotech companies producing a range of world-changing products for our healthcare system, but what about the companies they rely on? 

Healthcare management services are an integral part of biotech and our healthcare system at-large, as companies in this sector lay a foundation for the industry’s success. Consider Augmedix (NASDAQ: AUGX) as an example of this corner of the market. The company has developed an AI-based platform that streamlines medical documentation. This makes administrative tasks for doctors far more efficient, which inevitably improves patient care overall. The digitization of records, access to medical notes during visits, coding, orders, and referrals, are all time-consuming responsibilities for physicians and their staff, and we all know time is money. So Augmedix provides clinics and hospitals an opportunity to use it all more efficiently. What’s the value in this? Augmedix believes this simple approach creates a $6 billion opportunity.

The ingenuity from Augmedix alone is attention-grabbing, but it’s also a reminder that valuable  investments in biotech can be found when thinking and looking outside the box. Remember that the next time you are rounding out your personal watchlist. 


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