After a difficult year of 2022 on the markets, many asset classes saw rebounding performances in 2023. While the central banks' turnaround on interest rates ensured a “return to normality” on the bond market, the focus on the equity market was primarily on technology companies. In the Funds exclusive series, the fund managers of selected funds look back on developments of the previous year and give their assessment of what the markets could expect in 2024. (Note: Prognoses are not a reliable indicator of future performance.)

"Valuations in the biotech sector remain very attractive, particularly for small and mid-caps."

Harald Kober, fund manager ERSTE STOCK BIOTEC

Fund & Performance

The ERSTE STOCK BIOTEC invests primarily in companies in the developed markets from the field of biotechnology. The fund's investment process is based on fundamental business analysis. The majority of companies in this area can be found in the United States. As a result, Pacific and European equities tend to play a subordinated role in the fund. 

Note: Past performance is not a reliable indicator of future performance.

Performance since start of the fund. The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation.

Commentary by fund manager Harald Kober

How would you sum up the market year 2023?

In January 2023, the sector was still benefiting from the performance of growth stocks before coming under pressure in February and then moving sideways until September. With the interest rate hikes and some binary research events in the biotech sector that mainly fell on the negative side, the sector dipped again in autumn. In this difficult macro environment with high inflation rates and interest rates and the associated tense financing environment, the growth-driven biotech sector is finding it quite difficult to perform.


What role does the Covid-19 pandemic and vaccine development still play for the biotech sector?

The Covid-19 pandemic is mostly only playing a subordinate role for companies anymore. Pfizer/BioNtech and Moderna have significantly reduced their sales of coronavirus vaccines and medicines over the course of the year and announced cost savings. Investors have increasingly focussed on the larger companies that already have drugs/therapies on the market, are making money with them, and have no financing concerns. Smaller companies that will need financing in the next 12 to 18 months have been particularly hard hit. More than 200 biotech companies are now trading below their cash level, which is a new record.


What was the situation with company takeovers in the sector in 2023?

However, there was no shortage of M&A activity in 2023. The takeover of Seagen by Pfizer was a true megamerger, and ERSTE STOCK BIOTEC benefited greatly. The takeover of Reata Pharmaceuticals by Biogen in July also contributed positively to the fund's performance. Biogen thereby secured a promising drug against inflammatory diseases. The acquisition of Iveric Bio (specialising in retinal diseases) by Astellas in April was another highlight. ERSTE STOCK BIOTEC was also invested here. ERSTE STOCK BIOTEC was increasingly invested in large and mid-cap companies in 2023, with small-caps commanding lower weights.


What are your expectations for the new year?

The cycle of interest rate hikes is likely to have come to a standstill due to falling inflation rates. The market is expecting initial interest rate cuts for mid-2024. Bond market yields are also falling. This would be a very good environment for growth shares and therefore also for the biotechnology sector.

Note: Prognoses are not a reliable indicator of future performance.

The major pharmaceutical and biotechnology companies have bulging coffers and, with the exception of the “obesity shares” Eli-Lilly and NovoNordisk, are trading at historically low P/E ratios. Valuations in the biotech sector remain very attractive, particularly for small and mid-caps. Takeover targets are increasingly likely to be companies that already have an approved drug or are close to approval.


Which new medications could come into focus in 2024?

With the positive news from Madrigal Pharmaceuticals' NASH research at a medical conference in Vienna, this disease has increasingly moved into the spotlight. To date, there are no effective treatments for NASH (non-alcoholic fatty liver inflammation). The decision on the marketing authorisation for the drug is expected in 2024 and is important for many companies in the field of liver diseases. In 2024, sales of the Alzheimer's drug LEQEMBI from Biogen/Eisai should also pick up speed and open up a market with the first new drug in 20 years.

The commercial success of Syfore from Appelis Pharmaceuticals in dry, age-related macular degeneration (disease of the centre of the retina of the eye) is also significant. We are focussing on companies (see also above) with a future-oriented business model and promising drug developments. Other examples include the shares of AstraZeneca (focus on oncology, strong sales and earnings growth in the coming years) and Biogen (has received approval for a new Alzheimer's drug that reduces protein deposits in the brain and is therefore intended to slow the progression of the disease).

Investors are currently focussing even more on commercial biotechnology companies with sales and profits that do not require a great deal of external financing. Small and mid-caps with very low valuations will benefit more from a positive sector sentiment than large-caps.

Note: The companies listed here have been selected as examples and do not constitute an investment recommendation. In the context of active management, the portfolio positions mentioned may change at any time. There is no guarantee that securities will be permanently included in the portfolio.


This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art  21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to Art  21 AIFMG, and the Key Information Document can be viewed in their latest versions at the website within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.