2020 – greater appreciation of science
The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. 2020 was an exceptional year, with the index rising 19.9% to 590.6, broadly in line with the FTSE AIM All-Share Index (+20.7%), but in complete contrast to the performances of the FTSE 100 (-14.3%) and FTSE All-Share (-12.5%) indices. A number of our life sciences companies really stepped up to meet the challenges posed by the COVID-19 pandemic and, with the market’s greater appreciation of science and technology, no less than 52% (27/52) took the opportunity to increase their capital bases. Even allowing for both capital increases and share buybacks, the index still rose 13.4% in 2020. Given the current situation with COVID-19, we expect the life sciences industry to remain very much the focus of attention in 2021, offering attractive shareholder returns.
- Since inauguration, the CAGR for the HHI has been 17.2%, compared with 0.1% for the FTSE All-Share Index and 6.1% for the FTSE AIM All-Share Index, highlighting the attractiveness of the healthcare sector as a long-term investment, even though it is capital-intensive.
- Of the 52 companies included in the HHI, 36 recorded an increase in their share prices in 2020, whereas 14 saw a fall, with two companies simply marking time.
- The variance between the best- and worst-performing stocks was exceptional, at 2,370% – Synairgen (SNG) rising 2,306% and Shield Therapeutics (STX) falling 65% – and ca.10x greater than usual; the median share price change was 27%.
- In relative terms, 27 stocks outperformed the index during 2020, with the other 25 underperforming.
- COVID-19: One positive to emerge from the COVID-19 pandemic was the response of the healthcare sector, highlighting some of the tremendous technologies that existed within many life sciences companies around the world. Many companies really stepped up to the challenges posed by the virus.