Biotech’s Resurgence: Innovation Amid Market Disruption or A Generational Opportunity in Innovation

The biotechnology sector is showing signs of a resurgence.

- Geofrey Hsu, Portfolio Manager, The Biotech Growth Trust

After several years of underperformance particularly among small and mid-cap companies, a convergence of scientific breakthroughs, shifting market dynamics, and growth in investor sentiment, is setting the stage for a potentially compelling recovery. For long-term investors and industry observers, this represents a significant opportunity to engage with an innovative and high-growth sector in the global economy at compelling valuations.

Breakthroughs Driving the Sector Forward

From early 2021 through the middle of 2025, small-cap biotech stocks (as represented by the Russell 2000 Biotech Index) significantly underperformed the broader market (as represented by the S&P 500), declining by 47.1 per cent in British pounds, while the market appreciated by 67.5 per cent. Today, nearly a quarter of listed biotech firms are now trading at negative enterprise values.