There are four things investors need to know about The Biotech Growth Trust.
1. The trust focuses on capital growth via investment in the global biotechnology industry.
The Biotech Growth Trust (BIOG) offers investors a unique opportunity to gain exposure to one of the most dynamic and rapidly evolving sectors of the global economy. BIOG is managed by Geoffrey Hsu and Josh Golomb at healthcare specialist OrbiMed, which has around $20bn of assets under management. BIOG has a team of around 150 professionals based across three continents, with offices in New York, San Francisco, London, Israel, Hong Kong, Shanghai and Mumbai. They aim to generate long-term capital growth from a diversified portfolio of global biotech stocks across the market cap spectrum. BIOG’s performance is measured against the Nasdaq Biotechnology Total Return Index (sterling adjusted). BIOG is structured to invest in innovative products that have the potential to revolutionise healthcare and significantly enhance quality of life worldwide. With a diversified portfolio, expert management and a proven track record of investing in transformative companies, BIOG is well positioned to deliver long-term capital appreciation for shareholders.
2. Biotech industry fundamentals are favourable.
An ageing global population is driving increased demand for innovative treatments and healthcare solutions. The biotech sector could be said to be enjoying a ‘golden era of innovation’ across a wide range of drug development areas, including oncology, weight loss and central nervous system conditions. Innovation has historically been the biggest driver of the biotech sector’s performance. The regulatory environment remains favourable, evidenced by approximately 450 new drug approvals by the US FDA over the past eight years. Also, M&A within the biotech sector is robust and is expected to remain so throughout 2026 and beyond, as large pharma companies look to bolster their product pipelines ahead of a major patent cliff, where products generating approximately $300bn in branded sales will see their patents expire.
The biotech industry has experienced an extended period of weakness, which began in early 2021, during a period of higher interest rates. This turned into the largest absolute, the largest relative and longest drawdown in its history. This share price weakness resulted in very attractive valuations, with the number of companies trading below the value of cash on their balance sheets at a record high. It should be noted that prior industry drawdowns have been followed by periods of significant biotech stock price outperformance. The valuations are disconnected to industry fundamentals, which remain favourable.
3. BIOG’s small-cap bias is likely to benefit returns.
BIOG’s managers employ a strategy that favours smaller (also known as emerging) biotech companies rather than large-cap biotech firms. Although smaller companies can be higher risk, they are at the cutting edge of medical innovation and potentially offer higher rewards. Smaller companies are more likely to be acquisition targets, and they are contributing around two-thirds to the total biopharmaceutical industry pipeline. While the trust’s performance has proved challenging during a period of biotech share weakness, over the long term, a focus on emerging biotech stocks has proved successful, and the trust’s recent performance has looked more encouraging.
4. The trust’s managers can draw on OrbiMed’s extensive resources.
Hsu and Golomb select stocks on a bottom-up basis following thorough in-depth fundamental research, which includes financial modelling, an assessment of research pipelines and identification of potential catalysts. Company meetings are a very important element of the research process. Reasons to initiate a new position include whether an early-stage company is approaching profitability, ahead of anticipated positive clinical data, or if a business is considered a potential takeover target. While the managers seek out the best potential opportunities across the globe, most of the portfolio is held in US companies, reflecting its dominance in the biotech industry, although BIOG has a notable exposure to China given the accelerated rate of biotechnology innovations in recent periods. BIOG’s portfolio turnover is relatively high because of its large emerging biotech exposure, where stocks can be volatile around clinical trial readouts.
Published 23 February 2026
