International Biotechnology Trust (LSE:IBT) portfolio manager Ailsa Craig talked with Proactive’s Stephen Gunnion about the trust’s recent outperformance, the resurgence of biotech markets, and why merger and acquisition (M&A) activity is becoming a key driver of returns.
Craig explained that after a prolonged downturn, biotech is regaining momentum, supported by improved performance and renewed investor interest. She highlighted that IBT benefited from gearing during market weakness and from multiple acquisitions within the portfolio, noting that “we have nine acquisitions out of the fund, making performance really strong.”
The trust employs a flexible investment strategy, combining both top-down and bottom-up approaches while actively rotating holdings based on clinical progress and market conditions. Craig emphasised that this adaptability has enabled IBT to outperform its peer group over the long term.
A major theme discussed was the acceleration in M&A activity, driven by large pharmaceutical companies facing significant patent expiries. Craig stated: “We're seeing a pickup in M&A right now because big pharma companies are facing massive patent expiry,” adding that further deal momentum is expected.
She also pointed to attractive valuations in late-stage biotech firms, particularly those nearing commercialisation, and noted increasing IPO activity as a sign that the sector is returning to normal. With strong demand from cash-rich pharma companies and improving fundamentals, Craig suggested now is a compelling time for investors to revisit biotech.
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