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HBM Healthcare Investments Ltd

Overview

HBM Healthcare Investments actively invests in the human medicine, biotechnology, medical technology and diagnostics sectors and related areas. The company holds and manages an international portfolio of promising companies.

Many of these companies have their lead products already available on the market or at an advanced stage of development. The portfolio companies are closely tracked and actively guided on their strategic directions. This is what makes HBM Healthcare Investments an interesting alternative to investing in big pharma and biotech companies. HBM Healthcare Investments has an international shareholder base and is listed on SIX Swiss Exchange (ticker: HBMN).

  • SIX Swiss Exchange-listed
  • Investment focus: Healthcare
  • Deal focus: Companies with revenues or in later stage of clinical development
  • Market cap: CHF 813 million

Key financials

"HBM Healthcare's success validates the strengths of our investment strategy."

Hans Peter Hasler, Chairman of the Board of Directors

Manager Overview

The role of investment advisor is  performed by HBM Partners Ltd, a Zug-based company founded in 2001 that belongs to the leading independent Asset Management Boutiques, exclusively investing in the global healthcare sector. The company manages approx. USD 1.5 billion. Its dedicated private and public equity investment teams have a long-term expertise with a compelling track record. HBM employees and board members are significant shareholders in the various HBM funds. HBM Partners is offering a broad range of different investment solutions along the lifecycle from private to public equity with long only, cross-over and total return strategies. However, HBM Partners is offering investment solutions tailored to the clients’ needs as well. HBM Partners AG is regulated by the Swiss regulator FINMA.

Market commentary

HBM Healthcare Investments bucked the market trend to close the 2015/2016 financial year in profit, thereby validating the success of its investment strategy. New investments in private companies ensure a diversified portfolio structure. Despite the corrections on the financial markets, the long-term value creation potential of the healthcare market remains intact. The Board of Directors is thus proposing an unchanged cash dividend for the year.

HBM Healthcare Investments closed the 2015/2016 financial year with a profit of CHF 23 million (NAV +3.6 percent), bucking a trend that saw significant share price correction in the healthcare sector after around three years of rising valuations. The MSCI World Health Care Index and the NASDAQ Biotechnology Index plummeted by 9 and 25 percent respectively during the reporting period (total return, in CHF).

HBM Healthcare Investments' success validates the strengths of our investment strategy: the Company invests a significant share of its funds in private companies, while making the most of opportunities in the public segment. Our portfolio composition – comprising more mature companies, those in the later stages of clinical development and a small number of firms in the early phases of development – once again proved its strategic worth during the period under review.

With recent IPOs and trade sales, the share of portfolio value accounted for by private companies is currently contracting. HBM Healthcare Investments will raise this allocation once again over the years to come. Along with their public counterparts, financial market corrections have also reduced the flow of capital available for investments in private companies. This helps us to find interesting candidates at reasonable valuations. As the first step in this restocking strategy, we added six new holdings to the portfolio of private companies during the reporting year. Further new investments are being prepared. We firmly believe that, in the future, successful clinical development will make a number of these companies attractive takeover candidates, or they will take their market capitalisation into the billions by going public. Ophthotech, Advanced Accelerator Applications and Pacira Pharmaceuticals are three current examples from our portfolio which have done just that. It goes without saying that there will also be setbacks along the way. We must recognise these as early as possible, and be strict in disposing of the holdings concerned.

We believe that the conditions for long-term value creation in the healthcare sector in general, and for HBM Healthcare Investments in particular, remain intact. Population growth, demographic shifts and the need for new therapies continue to be the most important drivers of growth. Furthermore, M&A activity involving companies with products that are unique on the healthcare market is likely to stay high.

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