1. Charting progress

  2. April 2021

    All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.


    The response to Covid-19, unimaginable a few years ago, is just one illustration of how healthcare innovation has led to a range of revolutionary new therapies

  3. Listen to Charting Progress.
  4. Innovation in healthcare has been a source of enduring fascination for Long Term Global Growth. We have always been attracted to businesses finding new ways to take costs out of the healthcare system.

    Healthcare is on the cusp of monumental change, thanks to converging technologies and a rapidly advancing understanding of human biology. Progress in gene sequencing is helping to unlock the secrets of human biology and address the molecular and genetic causes of disease. Medicine is progressing from reactive treatments towards prevention and cure, helping us live healthier and longer lives. Change will be driven by those with the most powerful and creative solutions to global needs.

    To put this in context: it took 13 years and $3bn to sequence the first human genome in 2003. Today, it can be done in less than an hour at a cost of $600. Illumina, an LTGG portfolio holding since 2011, made gene sequencing accessible to virtually any scientist. What was rare and expensive a few years ago is affordable and pervasive today. As a result we’re getting better and faster at studying and diagnosing diseases. That’s impacting every area – from cancer to heart disease to mental ill-health. Everything we thought we knew about disease is being re-examined through the lens of genetics.

    It’s all part of an exciting broader trend: the convergence of technologies. This dramatically accelerated our response to the coronavirus pandemic. The virus’s genome helped us to understand the nature of Covid-19: how we can diagnose it, and how to develop and produce a vaccine. Sequencing also enables us to track how the virus spreads and evolves.

    This combined approach is driving innovation in drug development, medical devices and the operational side of healthcare, while driving down costs. For decades drug discovery has largely been trial and error, with low success rates. But a new cohort of biotech companies is emerging, built on technologies that may provide a platform that can be used across multiple diseases.



    One company at the forefront is Moderna, which makes treatments based on mRNA, enabling us to introduce instructions into human cells to make proteins that treat or prevent disease. Moderna’s success has not come easily and the company has been investing in its mRNA platform for a decade. While the Covid-19 vaccine was its first commercial product, it is the tip of the iceberg and further drugs or vaccines will be developed more quickly and more cheaply. The beauty of Moderna’s approach is that by simply changing the sequence in its vaccine, for instance, it has the ability to create new drugs over and over again. This is how Moderna was able to move so quickly – its mRNA technology was already proven safe in 10 other clinical trials. Moderna took only two days from inserting the sequence of the coronavirus into a computer to arriving at the vaccine being used today.

    Consider this: Moderna had a vaccine for Covid-19 by 13 January 2020, a full two months before the World Health Organisation declared it a global pandemic.

    Moderna’s success with the Covid-19 vaccine was seen by the LTGG team as a validation of its mRNA technology. In effect it de-risked its other programmes in development. Most biotech companies essentially start from scratch with each new drug, and the odds are stacked against them. Nine out of ten drugs fail in clinical trials. This is changing. We are beginning to see companies that can structurally shift the odds of repeated success strongly in their favour.

    It’s that ability to repeat success that excites us as investors. Our past investments in biotech companies taught us that, without repeatability, the outside capital required reduced the likelihood of outsized returns. As investors, developing a platform technology greatly skews the odds in our favour as it enables an ongoing revenue stream that these companies can reinvest at high rates of return. Doing so allows them to grow exponentially.

    While the Covid-19 vaccine roll-out remains most urgent, there’s hope that the virus will become manageable now that we have several approved vaccines and treatment protocols. Of course, other health crises abound. Naturally they include cancer, nowhere more evident than in China, which accounts for around a third of global cancer deaths. The country’s ageing population means this is only set to get worse.

    In a bid to protect domestic drug companies, the Chinese Government has historically tried to keep rival western drugs out of the country. Thankfully this is changing, and the regulatory direction of travel is towards greater innovation, quality and efficacy. In this context, BeiGene, a recent addition to the portfolio, has stayed a step ahead in getting its drugs to approval stage and in raising funding. In stark contrast to China’s incumbent producers of generic drugs BeiGene was created from the outset as a genuinely innovative drug company that would adhere to strict global quality standards. We believe its ambitious pipeline of drugs, full commercial team and interesting culture all give it an enduring edge.

    Happily our route to understanding diseases, diagnosis and treatment is becoming faster, cheaper and more precise. The next area of healthcare to explore is delivery of care.

  5. As in so many industries, the events of last year forced the rapid acceptance and adoption of remote technologies, in this case telemedicine. Virtual consultations replaced practically all medical appointments that didn’t require physical contact, leaving sceptics confounded and paving the way for a new norm in providing and accessing care. This shift has benefited companies such as Ping An Good Doctor in China, which the LTGG team has been following for a couple of years. However, this is perhaps just the start. Our healthcare services are currently centralised in hospitals and clinics where equipment and expertise are concentrated. As monitoring and diagnostic equipment gets smaller and smarter, location becomes less important. And as costs continue to fall, we will see more of these devices in our local communities and even our homes.

    However, it’s not just where we receive care that’s changing. New business models are making healthcare more proactive and continuous. Diabetes treatment is one area where this is most advanced. Dexcom’s continuous glucose monitoring devices provide live information and can prompt doctors to adjust treatment when needed, without waiting for the next routine appointment or an emergency. Aside from the significant improvement in patient experience, the potential cost savings are huge. Diabetes is the most expensive disease globally, and preventable complications account for two thirds of the total cost. The pandemic has accelerated the adoption of remote monitoring technologies to maintain social distancing. Ultimately these technologies are changing the healthcare service we receive. They are tailoring care to each individual and making it more effective. And over the long term, this has the potential to create tremendous value.

    Where care has to be delivered in a hospital environment, specialist tools and equipment are helping drive further efficiencies. Intuitive Surgical, a leader in robot-assisted, minimally invasive surgery, is one such example and has been owned in the LTGG portfolio for over a decade. Its technology offers a compelling proposition to both healthcare providers and patients alike. Less invasive surgery means patients benefit from quicker recovery and fewer complications. This leads to shorter hospital stays, saving costs to the provider.


    Image: © Dexcom, Inc.


    Dexcom’s continuous glucose monitoring devices provide live information and can prompt doctors to adjust treatment when needed



    There’s no doubt that healthcare is on the brink of dramatic change. Technological advancement has enabled a new breed of companies to supercharge the pace and success of drug development. Sensors and technology are shifting healthcare delivery from hospital visits to remote monitoring and proactive treatment when needed – stripping out costs and improving both patient experience and outcomes.

    Let’s not forget, however, that the LTGG portfolio is built from the bottom up. Each holding must earn its place in the portfolio based on its own merits. While we have covered a few of the transformational healthcare companies in the portfolio, whether they be developing novel therapies or driving efficiencies within the system, there have been some notable sales of companies that no longer made the grade.

    The most recent was Ionis Pharmaceuticals, the proceeds of which were invested in Moderna and BeiGene. While this was a difficult decision, ultimately we felt there were better opportunities elsewhere. Our investment case focused on the development of a treatment platform to address a wide variety of diseases. Given the increased competition and the economics of its partnership with Biogen, we felt the upside potential was no longer attractive. Looking back further, in 2018 we sold our holding in Seattle Genetics an early-stage biotech company developing anticancer drugs. While during our five-year ownership the company had made significant progress with a lymphoma treatment, on the balance of probabilities we felt the five-times growth case was no longer compelling.

    Bluebird Bio’s exit from the portfolio in 2019 is perhaps one to dwell on. In this instance we sensed a change in management narrative, and the company appeared to start diluting its expertise across an increasingly wide array of partnerships in a bid to become an oncology leader. For us, this sounded alarm bells. A core element of the LTGG research process is assessing a company’s culture, which we believe holds the key to long-term success: any sense of a weakening or change of culture will always prompt questions. In complete contrast, BioNTech, Pfizer’s vaccine partner, the most recent healthcare name to enter the portfolio, has an interesting history and a strong and sound culture which we are prepared to back. Mark Urquhart recently spoke to Dr Uğur Şahin, BioNTech’s CEO and co-founder. His report from this meeting is worth quoting at length:

    “As a young boy, he [Şahin] moved from his homeland of Turkey to Cologne. In 2001, armed with a doctorate in immunotherapy, he and his wife, Dr Özlem Türeci, the German daughter of a Turkish immigrant, founded Ganymed Pharmaceuticals, which sought to treat cancer with monoclonal antibodies. This was followed by the founding of BioNTech, which added mRNA to the technologies they wished to use to tackle cancer.


    Dr Uğur Şahin and Dr Özlem Türeci.
    © Felix Schmitt /Focus/eyevine.


    “The ‘NT’ in the company’s name is important as it stands for ‘New Technology’ and for him BioNTech’s purpose is to combine biology, immunology and technology to improve lives. Disruption happens when you bring innovations together and this is central to everything they do at BioNTech. In recruitment, the question he always asks is whether the person fits the company’s DNA – he doesn’t want people who just want to make money, rather they must share his vision of wanting to make a difference for the whole planet. It is easy to dismiss such a sentiment as corporate hogwash but there is a genuineness to Dr Şahin that compelled me to believe him.

    “For me, this first encounter with Dr Şahin left a large impression. He told an anecdote about a big pharma executive who dismissively told him at a conference that mRNA treatments are ‘simply not possible’ and how he has used that as fuel to drive him forward. As hundreds of thousands of daily vaccines are delivered to patients globally, it seems fair to say that Dr Şahin’s vision has triumphed over the unnamed executive’s cynicism. Dr Şahin stands out from other founders in this area whom I have encountered in the past not because of the New York Times cover spreads or FT Person of the Year awards but because this company is his life’s work. He is passionate, committed and someone whom I am happy to entrust our clients’ capital with over the next decade and beyond.”

    Even in the inherently scientific and data-driven field of healthcare we find the intangible and the qualitative to be hugely interesting and important. A great transformation is underway in our understanding and treatment of disease but there is much more progress to be made. Companies with vision, passion and adaptability are the ones we are keenest to back.


  6. Annual Past Performance to 31 December Each Year

      2016 2017 2018 2019 2020
    LTGG Composite Net (%) -4.0 54.0 -1.6 34.1 102.0
    MSCI AC World Index (%) 8.5 24.6 -8.9 27.3 16.8

    Source: Baillie Gifford & Co and underlying index providers. US Dollars.

    Past performance is not a guide to future results. Changes in the investment strategies, contributions or withdrawals may materially alter the performance and results of the portfolio. All investment strategies have the potential for profit and loss.


    Risk Factors

    The views expressed in this article are those of the LTGG Team and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

    This communication was produced and approved in in March 2021 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

    Potential for Profit and Loss

    All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.

    Stock Examples

    Any stock examples and images used in this article are not intended to represent recommendations to buy or sell, neither is it implied that they will prove profitable in the future. It is not known whether they will feature in any future portfolio produced by us. Any individual examples will represent only a small part of the overall portfolio and are inserted purely to help illustrate our investment style.

    This article contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.


    All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.

    The images used in this article are for illustrative purposes only.


    Important Information

    Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs.

    Baillie Gifford Overseas Limited provides investment management and advisory services to non-UK Professional/Institutional clients only. Baillie Gifford Overseas Limited is wholly owned by Baillie Gifford & Co. Baillie Gifford & Co and Baillie Gifford Overseas Limited are authorised and regulated by the FCA in the UK.

    Persons resident or domiciled outside the UK should consult with their professional advisers as to whether they require any governmental or other consents in order to enable them to invest, and with their tax advisers for advice relevant to their own particular circumstances.


    Baillie Gifford Investment Management (Europe) Limited provides investment management and advisory services to European (excluding UK) clients. It was incorporated in Ireland in May 2018 and is authorised by the Central Bank of Ireland. Through its MiFID passport, it has established Baillie Gifford Investment Management (Europe) Limited (Frankfurt Branch) to market its investment management and advisory services and distribute Baillie Gifford Worldwide Funds plc in Germany. Baillie Gifford Investment Management (Europe) Limited also has a representative office in Zurich, Switzerland pursuant to Art. 58 of the Federal Act on Financial Institutions ("FinIA"). It does not constitute a branch and therefore does not have authority to commit Baillie Gifford Investment Management (Europe) Limited. It is the intention to ask for the authorisation by the Swiss Financial Market Supervisory Authority (FINMA) to maintain this representative office of a foreign asset manager of collective assets in Switzerland pursuant to the applicable transitional provisions of FinIA. Baillie Gifford Investment Management (Europe) Limited is a wholly owned subsidiary of Baillie Gifford Overseas Limited, which is wholly owned by Baillie Gifford & Co.

    Hong Kong

    Baillie Gifford Asia (Hong Kong) Limited 柏基亞洲(香港)有限公司 is wholly owned by Baillie Gifford Overseas Limited and holds a Type 1 and a Type 2 licence from the Securities & Futures Commission of Hong Kong to market and distribute Baillie Gifford’s range of collective investment schemes to professional investors in Hong Kong. Baillie Gifford Asia (Hong Kong) Limited 柏基亞洲(香港)有限公司 can be contacted at Suites 2713-2715, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. Telephone +852 3756 5700.

    South Korea

    Baillie Gifford Overseas Limited is licensed with the Financial Services Commission in South Korea as a cross border Discretionary Investment Manager and Non-discretionary Investment Adviser.


    Mitsubishi UFJ Baillie Gifford Asset Management Limited (‘MUBGAM’) is a joint venture company between Mitsubishi UFJ Trust & Banking Corporation and Baillie Gifford Overseas Limited. MUBGAM is authorised and regulated by the Financial Conduct Authority.


    This material is provided on the basis that you are a wholesale client as defined within s761G of the Corporations Act 2001 (Cth). Baillie Gifford Overseas Limited (ARBN 118 567 178) is registered as a foreign company under the Corporations Act 2001 (Cth). It is exempt from the requirement to hold an Australian Financial Services License under the Corporations Act 2001 (Cth) in respect of these financial services provided to Australian wholesale clients. Baillie Gifford Overseas Limited is authorised and regulated by the Financial Conduct Authority under UK laws which differ from those applicable in Australia.

    South Africa

    Baillie Gifford Overseas Limited is registered as a Foreign Financial Services Provider with the Financial Sector Conduct Authority in South Africa.

    North America

    Baillie Gifford International LLC is wholly owned by Baillie Gifford Overseas Limited; it was formed in Delaware in 2005 and is registered with the SEC. It is the legal entity through which Baillie Gifford Overseas Limited provides client service and marketing functions in North America. Baillie Gifford Overseas Limited is registered with the SEC in the United States of America.

    The Manager is not resident in Canada, its head office and principal place of business is in Edinburgh, Scotland. Baillie Gifford Overseas Limited is regulated in Canada as a portfolio manager and exempt market dealer with the Ontario Securities Commission ('OSC'). Its portfolio manager licence is currently passported into Alberta, Quebec, Saskatchewan, Manitoba and Newfoundland & Labrador whereas the exempt market dealer licence is passported across all Canadian provinces and territories. Baillie Gifford International LLC is regulated by the OSC as an exempt market and its licence is passported across all Canadian provinces and territories. Baillie Gifford Investment Management (Europe) Limited (‘BGE’) relies on the International Investment Fund Manager Exemption in the provinces of Ontario and Quebec.


    Baillie Gifford Overseas Limited (“BGO”) neither has a registered business presence nor a representative office in Oman and does not undertake banking business or provide financial services in Oman. Consequently, BGO is not regulated by either the Central Bank of Oman or Oman’s Capital Market Authority. No authorization, licence or approval has been received from the Capital Market Authority of Oman or any other regulatory authority in Oman, to provide such advice or service within Oman.  BGO does not solicit business in Oman and does not market, offer, sell or distribute any financial or investment products or services in Oman and no subscription to any securities, products or financial services may or will be consummated within Oman.  The recipient of this document represents that it is a financial institution or a sophisticated investor (as described in Article 139 of the Executive Regulations of the Capital Market Law) and that its officers/employees have such experience in business and financial matters that they are capable of evaluating the merits and risks of investments.


    This strategy is only being offered to a limited number of investors who are willing and able to conduct an independent investigation of the risks involved. This does not constitute an offer to the public and is for the use only of the named addressee and should not be given or shown to any other person (other than employees, agents, or consultants in connection with the addressee’s consideration thereof). Baillie Gifford Overseas Limited has not been and will not be registered with Qatar Central Bank or under any laws of the State of Qatar. No transactions will be concluded in your jurisdiction and any inquiries regarding the strategy should be made to Baillie Gifford.


    Baillie Gifford Overseas is not licensed under Israel’s Regulation of Investment Advising, Investment Marketing and Portfolio Management Law, 5755-1995 (the Advice Law) and does not carry insurance pursuant to the Advice Law. This document is only intended for those categories of Israeli residents who are qualified clients listed on the First Addendum to the Advice Law.


    52033 INS AR 0813