Switzerland’s burgeoning biotech industry continued to gather momentum in 2019 as revenues once again enjoyed healthy year-on-year growth. The Swiss Biotech Report 2020 – to which the Swiss Stock Exchange is a key contributor - provides a comprehensive outlook on the domestic biotech market and showcases some of the game-changing innovations that currently define the sector.
As one of the world’s leading biotech and life sciences stock exchanges – and the listing destination of choice for some of Europe’s largest biotech companies – the Swiss Stock Exchange is an industry thought leader in the sector, and sits on the steering committee of the Swiss Biotech Association. Moreover, Switzerland’s deep investor pool, strong banking system and industry expertise make it an appealing market for biotech firms looking to list.
The Index Outperformer
Conscious of the importance of biotech in Switzerland, the Swiss Stock Exchange developed its own sector-specific index – the Swiss Bio+Medtech Index (SXI) – in 2004 to increase the industry’s visibility. Its excellent track record speaks for itself. The SXI has produced returns of 59% over the last five years, outperforming both the Swiss Performance Index (31%) and the NASDAQ Biotechnology Index (35%). This is indicative of the calibre of the companies listed on the exchange.
The risk-returns and heightened volatility of biotech securities are well documented, although investors on the SXI have been compensated for their risks. Relative to the NYSE Arca Biotechnology and NASDAQ Biotechnology indices, the SXI’s risk-return profile continues to be very attractive. The Swiss Stock Exchange provides a number of access channels for investors to trade biotech securities. For instance, exposures can be facilitated through either investing directly into the single stocks of public biotech companies or through other listed products.
The Swiss Stock Exchange, for instance, offers exposure to biotech companies via two listed ETFs and six investment funds. That there are more products as well as greater assets under management (AuM) in the investment funds suggests that Swiss investors prefer actively managed - rather than passive exposure - to the biotech industry, in contrast to the wider market transition towards trackers.
Breaking through with innovation
The Swiss Stock Exchange is synonymous with innovation. Through its "Stage Program", the exchange helps listed companies enhance their market presence and establish appropriate valuations through research coverage. Investors often have high expectations but can be very sensitive to news around corporate events, which can result in biotech stocks suffering from heightened volatility.
The Stage Program was created to increase the provision of information on companies available to the market in a targeted manner. Two biotech companies – Addex Therapeutics and Newron Pharmaceuticals –are currently part of this programme and we expect others to follow.