Swiss Life Sciences Withstand the Volatility
Although Switzerland’s stock market is not immune from the knock-on effects brought about the ongoing geopolitical tensions and various macroeconomic challenges, the country’s burgeoning life sciences industry is seemingly weathering the storm, outperforming its US benchmark with both an excess return and lower volatility. Since January 2019, the SXI Life Science Index has outperformed the NASDAQ Health Care Index by 13.6%, with lower fluctuations in value as well.
At the same time, the volume of IPOs involving Swiss biotech companies also held firm, despite the global slowdown in public listings generally, a direct consequence of the rising interest rates and multi-decade high inflation.
In 2022, two new companies from the biotech sector listed on SIX Swiss Exchange - Kinarus Therapeutics and Xlife Sciences, the latter of which was the first company to go public on the newly launched SME stock exchange segment Sparks.
Given the market uncertainty, it is critical that companies looking to go public – including those in the biotech sector – identify a listing destination, which suits their bespoke needs . While companies listing in the US might benefit from higher valuations, there are a number of pitfalls.
Most notably, the regulatory costs of going public in the US are generally higher, as issuers are expected to submit a registration document to the Securities and Exchange Commission (SEC), which can often be a lengthy process. Other expenditures facing companies when listing in the US include Directors & Officers liability insurance, and complying with exhaustive regulatory requirements such as the Sarbanes Oxley Act.
Furthermore, the costs for legal and tax advice increase substantially for a Swiss company listing its shares on a US stock exchange as they need to appoint a separate Swiss and US law firm. And finally, companies listing on SIX Swiss Exchange can also benefit from its comparatively low initial listing and maintenance fees relative to some of its equivalents in the US.
Given these constraints, some Swiss biotech companies might rethink whether to list in the US, especially as it is possible for them to access US investors (in addition to cash-rich domestic Swiss allocators) by including a Rule 144A offering in their IPOs at SIX Swiss Exchange.
Further information in the Swiss Biotech Report 2023.