Biotech’s next chapter: smarter antibodies, bigger partnerships

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International biopharma deserves attention right now. As low-cost copycat biosimilars compress the economics of first-generation antibody franchises, value is shifting toward platform advantage: creating drugs with better target biology, better delivery and better manufacturing execution.

Europe still produces durable franchises and globally competitive pipelines, while parts of Asia, especially China, are increasingly supplying differentiated clinical assets that multinationals are using to refresh growth.

From monoclonal antibodies to a more competitive era

Monoclonal antibodies (mAbs) are lab-made proteins engineered to bind a single target, often a marker on a cancer cell or a signalling molecule in inflammation. They’re the immune system’s playbook made manufacturable: highly specific, repeatable and scalable.

The platform’s roots lie in 1970s breakthroughs that enabled the production of uniform antibodies, which, in turn, unlocked reliable manufacturing and consistent clinical performance. Genentech helped turn that science into a commercial engine, proving antibodies could become cornerstone therapies across oncology and immune disease.

Roche’s acquisition of Genentech underlined how strategically valuable and globally scalable the platform had become, a success that would spark a wave of fast followers.

Today, many first-generation mAbs are mature products. As patents expire, biosimilars (highly similar versions of biologic drugs) are reshaping market structure.

That shift matters for both outcomes and economics: pricing pressure and share loss can reset growth expectations, and competition pushes the industry away from incremental lifecycle management toward genuinely differentiated next-generation approaches.

The next chapter

Antibody-drug conjugates (ADCs) and bispecific antibodies are two of the clearest ‘next chapters’ in antibody-based medicine.

ADCs preserve the targeting function of an antibody, but add a payload, typically, a highly potent anti-cancer agent via a chemical linker.

Bispecifics, by contrast, are engineered to bind two different targets at once, allowing a single molecule to either bring two cell types into close proximity or to more precisely tune signalling pathways simultaneously.

In both cases, the core promise is the same: extend what antibodies can do beyond simple target neutralisation, using biology and chemistry to improve efficacy while aiming to reduce side effects through increased selectivity, ultimately, delivering better clinical outcomes and renewed product differentiation.

Cross-border partnering

One of the cleanest ways to observe this transition is through industry partnering behaviour.

Last year, biopharma licensing deal value reached a 10-year high, about $230bn, reflecting both Big Pharma’s growing reliance on partnering to refresh pipelines and a surge in China-originated innovation. Therapeutic in-licensing involving China-originated assets more than doubled to more than $100bn from about $45bn in 2024.

Oncology has provided the clearest illustration of this shift. Last year, Bristol Myers Squibb struck an $11.1bn deal with BioNTech for a bispecific antibody targeting multiple solid tumour types, an asset originally developed by Chinese biotech Biotheus.

Roche, meanwhile, licensed Hansoh’s developmental ADC for colorectal cancer in a deal worth up to $1.4bn.

Taken together, these transactions highlight how cross-border licensing and co-development can accelerate the creation of globally competitive cancer programmes and, more broadly, underscore China’s emergence as a reliable, repeatable source of pipeline-relevant innovation rather than an occasional outlier.

Expressing the opportunity in portfolios

There isn’t a single ‘right’ way to express the international biopharma opportunity in portfolios. Different strategies will hold different mixes of companies and opportunity types, depending on their philosophy, risk budget, and how they underwrite uncertainty. What’s consistent is the building blocks we can draw on:

• Durable incumbents (franchise compounders): Some strategies will lean towards large biopharma leaders such as Roche, using them as core holdings where cash generation, capital allocation and breadth of pipeline matter.
• Infrastructure beneficiaries (picks-and-shovels): Other strategies may prefer to express the theme through enabling businesses; high-quality contract development and manufacturing organisations (CDMOs) such as Lonza and WuXi Biologics, where returns can be driven by the scaling of biologics and complex modalities across many programmes, rather than by any single drug.
• Selective innovation optionality (asymmetric upside): Strategies with a higher tolerance for idiosyncratic risk may add smaller, more targeted exposure to differentiated Chinese innovators such as Akeso, where upside can be substantial if assets ‘travel’ globally, balanced with clear guardrails around sizing, liquidity, and regulatory scenarios.

In practice, the portfolio expression follows the process: the same opportunity set can translate into very different allocations depending on whether a strategy prioritises resilience, platform exposure, or higher-conviction optionality.

Follow the deal flow

Licensing and co-development activity is one of the best real-time signals in biopharma because it reveals where large companies are choosing to take risk, deploy capital and refresh pipelines.

When the same regions and platform families repeatedly appear on the other side of those deals, at record values, it’s a strong indicator of where globally relevant innovation is concentrating.

Risk factors 

The Funds are distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited. All information is sourced from Baillie Gifford & Co unless otherwise stated.

As with all mutual funds, the value of an investment in the Fund could decline, so you could lose money. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. These risks are even greater when investing in emerging markets. Security prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. Currency risk includes the risk that the foreign currencies in which a Fund’s investments are traded, in which a Fund receives income, or in which a Fund has taken a position, will decline in value relative to the U.S. dollar. Hedging against a decline in the value of currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. In addition, hedging a foreign currency can have a negative effect on performance if the U.S. dollar declines in value relative to that currency, or if the currency hedging is otherwise ineffective.

For more information about these and other risks of an investment in the Funds, see "Additional Information about Principal Strategies and Risks" in the prospectus. There can be no assurance that the Funds will achieve their investment objectives.

This communication was produced and approved in March 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.

As at February 2026, Baillie Gifford held BioNTech, Roche, WuXi Biologics and Akeso. A full list of holdings is available on request and is subject to change.

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