Biopharma, a strategic investment opportunity

There is a famous Arabic saying: “Whenever there is a problem, there is an opportunity.”
Major sovereign investment funds and global investors have, since the start of the COVID-19 crisis, been hunting for opportunities that are either mispriced or have distressed assets. Saudi Arabia’s Public Investment Fund (PIF) was recently successful in acquiring stakes in distressed public companies in different sectors, including entertainment and oil.
Another investment area that has recently re-emerged is biopharmaceuticals, which has become a top target for health care fund managers since the outbreak.
It probably comes as no surprise that some of the best performing, albeit volatile,  stocks of the last few weeks are companies that claim to be hunting for a COVID-19 cure. The reason for this is two-fold.
First, biopharma and health companies are among the sectors that will always be needed even during a recession. This means they are likely to be less affected than other sectors in the long term. The other is that investors know that finding a COVID-19 cure is akin to hitting a gold mine.
I do not believe anyone knows whether a cure will be found any time soon. No cure has yet been found for MERS or SARS, although it has been many years since their outbreak. Yet COVID-19 is a threat unlike any we have faced before, and the global efforts to find a solution could prove to be more successful than previous ventures.
It is worth noting that the hunt for deals these days has echoes of the 2008 global financial crisis. Today, however, we are battling the COVID-19 pandemic which has had an impact on us at a local and global level.
We at BMG Financial Group, in association with our partner AcedrA Biopharmaceuticals, have been talking to senior management at international biopharmaceutical companies with the intention to secure long-term strategic investors to finance the next rounds for drug and trial developments. We plan to set up a biopharma diversified fund that will invest in these growing companies as a timely and long-term strategic investment, subject to the approval of the Capital Market Authority and other authorities.
These days, by applying a mix of strategic and opportunistic investment styles, I am sure that wise investors in Saudi Arabia and around the world will be looking at the long-term and upside potential of this global crisis.
Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.