Solactive AG has launched the Solactive Pharma & Biotech Opportunity Index, which will be used as underlying by Société Générale Corporate & Investment Banking (SG CIB) for an Open End Certificate targeting IFAs as well as clients in retail and private banking based both in Germany and Austria.
The intent behind the creation of the Solactive Pharma & Biotech Opportunity Index is to capture the significant growth of the consolidating pharmaceutical and biotechnology healthcare industry, through companies which are potential targets of mergers & acquisitions (M&A) activity. So the Index has been designed to follow pharma & biotech stocks which have both low market to book value relative to their peers and high sales growth over the past three years.
With existing costs and in-house resources needed to take a new drug concept and turn it into an approved, effective treatment, M&A has been common practice in the pharmaceutical industry for decades. As the competition for tomorrow's blockbuster drugs has intensified in an era of historically low interest rates, many big drug makers have been looking at buying smaller, biotech companies to refill their R&D pipeline -- AbbVie’s acquisition of Pharmacyclics for USD 21 billion is the latest example of that trend. Since the start of last year, deals have indeed been mostly smaller and more targeted than in the past; but as they are abundant they have reached a record of around USD 470 billion over that period and many more are expected to follow.
Steffen Scheuble, CEO, Solactive, said: “Being close to the market, following the latest trends and launching first of their kinds indices is key to an Index Provider. The Solactive Pharma & Biotech Opportunity Index is a great example of an innovative idea with a huge potential -- tracking stocks in the growing pharma & biotech industry whose price would benefit from the premium paid if they do get acquired.”
Peter Bösenberg, Director - Head of Public Distribution Germany & Austria, SG CIB, said: “Through the new Open End Certificate on the Pharma & Biotech Opportunity-Index, Investors have an interesting opportunity to benefit from the increasing M&A Activity in terms of the consolidation of the Pharma & Biotech Industry.”
To be included in the Solactive Pharma & Biotech Opportunity Index, stocks need to meet the following criteria:
- market capitalization between USD 2 billion and USD 20 billion,
- 3 months average daily value traded of USD 5 million or more, and
- market to book value both positive and below median.
The top 30 companies with the highest 3 year average sales growth are then selected as final components and equal weighted in the Index.
Country breakdown of the Solactive Pharma & Biotech Opportunity Index
Amongst the 30 components of the Solactive Pharma & Biotech Opportunity Index are the following stocks: Otsuka (Japan), Mallinckrodt Pharmaceuticals (United States), Aspen Pharmacare (South Africa), Lonza (Switzerland) and Stada Arzneimittel (Germany).
Published in USD, the Solactive Pharma & Biotech Opportunity Index is total return. The Index is based on 100 at the close of trading on the start date, May 4th 2015. The composition of the Index is adjusted quarterly in February, May, August and November.
For more information, please visit the Solactive Pharma & Biotech Opportunity Index webpage.
