The ground-breaking technology of synthetic biology is set to transform large swathes of the global economy, creating opportunities as well as risks across multiple sectors and industries. As this scientific revolution gathers momentum, many companies will be disrupted, whilst others will thrive. New winners and sources of profit will emerge.
In this paper, we take a closer look at the science behind this pioneering technology, its transformative potential and why it matters for long-term equity investors.
Key takeaways
- No long-term investor can ignore synthetic biology. It has revolutionised healthcare and is poised to have a profound impact on much that we manufacture and consume. McKinsey estimates that up to 60% of the global economy’s physical inputs could be produced biologically1.
- Biologic drugs are now the primary growth engines of the world’s largest pharmaceutical companies, creating long-term investment opportunities across the healthcare value chain. The contract development and manufacturing market alone is expected to be worth US$290 billion by 20272.
- Beyond healthcare, synthetic biology holds significant promise, but for investors a degree of caution is warranted. How and when the technology translates into sustainable earnings growth, consistent cashflow and enduring competitive advantages is as yet uncertain.
- Despite its many obvious benefits, the evolution of synthetic biology will not be without challenges. Regulatory and ethical questions must be addressed, whilst safeguarding biosecurity is vital in a world of heightened geopolitical tensions.
Sources:
1 McKinsey Global Institute – The Bio Revolution, May 2020
2 https://www.mordorintelligence.com/industry-reports/pharmaceutical-contract-development-and-manufacturing-organization-cdmo-market
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Stock Examples
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