International Biotechnology looking to the long term rather than corona cures

Healthcare companies around the world are scrambling to produce drugs and vaccines to treat and immunise people against Covid-19. However, the managers of International Biotechnology Trust (IBT) are not necessarily investing in these companies as their share prices are volatile, shooting up on reports of possible treatments in development. For example, Carl Harald Janson, lead manager of International Biotechnology Trust, recently reduced the trust’s holding in Gilead Sciences (US:GILD) – which accounted for 6 per cent of its assets at the end of March – when its share price hit $85 (£68.41), up from $65 at the start of the year. He says there is a risk that vaccine developers will become overvalued as there is pressure to make drugs as affordable as possible. Dr Janson and his team have also sold some of the trust's holdings in small, early-stage companies with little cash, which might struggle to refinance over the next 18 months. And, due to falls in world markets, the trust's board reduced its gearing – debt – from 8 per cent at the start of the year to zero. This is because if an investment trust borrows money to invest in more stocks than it can buy with its assets, and thenmarkets fall, it can compound the trust's losses.