Hardman Healthcare Index: 2017 – another year of outperformance

11 Jan 2018 / Corporate research

The Hardman Healthcare Index has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. 2017 was another successful year for the index, rising 20.3% to 437.3, and outperforming the London Allshare index, which grew 9.0% to 4,221.8. However, for the second year running, the index has trailed the performance of the AIM market, which rose 24.3% to 1049.6. Furthermore, several companies in our index increased their capital base – 21 of our 54 constituents raised new funds, three issued shares as part consideration for acquisitions, and two had share buybacks – all factors that influence the performance of the index. But even allowing for both capital increases and share buybacks, the index still increased by a creditable 11.5%.

  • Since inauguration, the compound annual growth rate of the Hardman Healthcare Index has been +20.5%, compared with +5.4% for the Allshare Index and +6.1% for the AIM index, highlighting the attractiveness of the healthcare sector as a long-term investment, even though it is capital intensive.
  • Of the 54 companies included in the Hardman index, 31 saw their share prices rise in 2017, whereas 23 fell, with no company simply marking time.
  • The variance between the best and worst performing stocks was high at 301%
    – Immupharma (IMM) rising 227% and Vernalis (VER) falling 74% – the median share price change was +9%.
  • Interestingly in relative terms, only 20 stocks outperformed the index over the last year, with the other 34 underperforming.
    Tristel (TSTL) has been one of the top five stocks in four out of the last five years on the back of strong financial performance indicators, rising eight-fold over the period.