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COVID-19’s Impact on Biotech – A Good Time to Invest


A Pandemic Legacy: Saving Lives

The devastating impact of the COVID-19 pandemic is continuing to be felt, both in terms of human cost and the destruction it has wrought on the economies of the world. However, there looks to be a silver lining to the COVID cloud in the shape of medical research.

 Change in research and development for healthcare

The pandemic has completely transformed how research and development for healthcare are conducted and funded—most obviously in the fields of vaccine and drug development, but also with the use of artificial intelligence for medical research. In this context, it is not unreasonable to hope that the research spurred on by COVID-19 may, one day, save more lives than the pandemic has taken.

Biotech thrived where other sectors stagnated

In the dark, locked-down days of 2020–2021, the Biotech sector thrived where other sectors stagnated. However, the understandably stratospheric financial performance shown by companies like Moderna, BioNTech, and Pfizer, over that period has slowed, with the market recognizing that the crest of that particular wave has passed.

However, with predictions of a slow-down now priced into market valuations—and with the world now awake to the possibilities that new medical technologies present—does Biotech still represent a good investment opportunity? And can investors help to prepare humanity for the next great pandemic when it comes?

The mRNA Breakthrough

The most obvious and well-publicized development regarding COVID-19’s impact on Biotech has been the use of mRNA in the creation of vaccines. Messenger RiboNucleic Acid, to give it its full and catchy name, works by instructing the human body to create antibodies (as opposed to the traditional method, which encourages the creation of antibodies by exposing the immune system to a small part of the virus).

The idea of using mRNA technology is not new but has been treated with skepticism for some time. Moderna, one of the pioneers of the technology, was unable to use it to develop a drug until 2020.

However, now the world has seen the astonishing success of the technology, there are trials underway for mRNA vaccines against a host of diseases—including HIV, shingles, and flu. There is also optimism that the technology may even be able to be adapted in the development of cancer-curing drugs.

An AI Revolution

Less heralded but potentially even more exciting has been the expansion in the use of artificial intelligence and machine learning in the development of drugs. As in other sectors, the benefits of AI in this field boil down to its ability to expedite the process of analyzing information and accurately predicting outcomes.

In 2020, BioNTech collaborated with Tunisian start-up Instadeep to model the behaviors of protein, aiding in the creation of the company’s COVID-19 vaccine—a great example of innovation in the field of machine learning, as the tools used were developed originally for language translation.

Development of computation method to predict future mutations

Earlier this year (2022), the companies announced that the same tools had been used to create a computational method that can predict future mutations of the virus — demonstrating the vast potential and versatility of AI in Biotech.

Other uses of AI include examining a range of existing drugs in the hope that they may be repurposed for the treatment of other illnesses and diseases. It has also been applied in a building management/architecture environment to simulate airflow models within hospitals and to reduce (or prevent) the transmission of airborne diseases.

Innovation from Crisis

Beyond these radical changes in how drugs and treatments are developed, the pandemic has also brought about more prosaic but no less critical advances in antiviral drug treatments, as well as trials and diagnostics.

Pfizer’s “Paxlovid” drug, used in the treatment of moderate COVID-19 cases, has been demonstrated to be almost 90% effective in preventing death or hospitalization. Meanwhile, another treatment used in the fight against the virus is “monoclonal antibodies”—just one output from the huge amount of research conducted into new antibody treatments over the past two years.

Expansion in Remote Drug Trials

The urgency of COVID-19 stimulated an expansion in remote drug trials, and the birth of “mega trials” has been demonstrated to rapidly accelerate the process of testing and consequent approval of useful drugs.

Likewise, diagnostic technology has also seen rapid advancements, with a global acknowledgment of the pressing need to have a robust diagnostic structure to help prevent or mitigate the next pandemic threat.

Investing in Biotech Amid the Pandemic: Opportunities for the Long Term

With the war in Ukraine, a cost-of-living crisis, and the world still recovering from COVID-19, the climate remains challenging for many sectors, but Biotech bucks this trend. Thinking about the future, many of the recent developments present exciting investment possibilities for the sector.

Biotechs Double Digit Growth — VC — Triple Digit Growth from IPOs

From 2019–2020, Biotech saw annual growth in double digits from VC—with triple-digit growth from IPOs during that period. While we may not see another year like that, the sector has a well-earned reputation for being a safe investment bet and a perennial home of innovation.

Of course, the current pandemic is not over yet, and as it moves from pandemic to endemic, new challenges will continue to create new opportunities. Mutations are likely to cause further regional outbreaks and surges of the virus.

What About the Long Hauler Needs and Cures?

At the same time, another task is the increasingly pressing need to find cures or treatments for the fatigue, breathlessness, and brain fog that afflicts “long Covid” sufferers. An ongoing need for booster jabs, affordable testing, and treatments will provide plenty of opportunities for the industry to innovate.

The surge in healthcare research means that Biotech represents an excellent investment—and, above all, a way for investors to make a real impact in terms of global health as we continue to face the challenges of the coming decades.

Image Credit: Chokniti Khongchum; Pexels; Thank you!

Jimmy Ahern

Jimmy Ahern

Founding Partner at Lucius Partners, LLC, Founder of Laidlaw Venture Partners, and Managing Partner of Laidlaw & Company (UK) Ltd., James “Jimmy” Ahern is and expert in private equities, capital markets and venture capital with a focus on health tech and biotech. Having built the company’s portfolio by creating relationships with innovation laboratories at several universities, Jimmy has been instrumental in the incubation of several corporations.

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