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After a two-year decline in the fiscal year 2021/2022, the positive mood in the biotechnology industry continued in early January. This indicates favourable prospects based on historical data for the years 2000-2023, where early positive results foreshadowed a successful year. The rapid mergers and acquisitions of companies in the fourth quarter and the first few weeks of January further support optimism.

The expected reduction in interest rates should be an additional incentive for shares of biotech companies with a high beta coefficient and small market capitalization.

An Encouraging Start To 2024 

After a five-year period of excellence in 2011-2015, the biotech sector began to underperform the Nasdaq market from 2016 to 2021 for six years and the S&P 500 for four of those six years, indicating the length of the capital cycle. In 2022, the biotechnology sector began to improve again, and although its productivity lagged again in 2023, biotechnologies returned to their previous level and still ended the year with a moderate positive annual income.

The year 2024 was marked by a good start. The NBI grew by +2% by the end of the HC annual conference. A positive start for biotechnology correlates with positive returns in most cases. In addition, the NBI outperformed the broader market by +2.4% and +1.9% compared to the Nasdaq and S&P 500 by the end of the HC annual conference. Support from mergers and acquisitions also continued into the new year, with four deals announced in early January (of which two were >$1B), after Q4 ended with a significant surge in acquisitions.

Nasdaq Biotechnology Index

In 2024, the Nasdaq Biotechnology Index (NBI) showed a yield of +2% from January 1 to January 11 (before the end of the HC conference). In the last 24 years, there have been 18 years when the NBI had a positive start to the end of the conference, and in 14 of those 18 years (78%) this start was associated with positive returns for the rest of the year. The average return for the period from the end of the conference to the end of the year was +11% (the average annual return was +17% in these years).

On the other hand, the negative start for the NBI index in early January (before the end of the conference) is associated with a general negative indicator for the remainder of the year in 4 out of 6 years (4 out of 5, if we exclude 2009, which began almost unchanged), an average yield of -6% (the average annual return is -13% in these years).

Positive returns in 2023 and prospects for 2024

The biotech sector ended 2023 with positive returns despite an increase in interest rates. Interest rates continued to rise in the first half of 2023 before rate increases softened in the second half. Nevertheless, biotechnologies ended the year with an increase. In addition, our analysis shows that there is no correlation between the performance of biotech indices and interest rates.

Yields on 10-year Treasury bonds have risen in 11 of the last 24 years, with yields for biotech indexes ranging from -1% to 9% in those years.However, in 7 of these years (64% of the time), biotech indices showed positive annual returns. Expectations of a reduction in interest rates in 2024 have removed some investor concerns about worsening macroeconomic pressures. But history shows that an increase in interest rates has mostly not been a major risk to the sector’s productivity.

In 2024, biotechnologies will continue to be driven by investment sentiment and other macroeconomic factors (e.g. fund flows, mergers and acquisitions, FDA performance).


The volume of transactions and their value in 2023 ended successfully – the momentum continued in early January. Investors were also interested in how the deals compared to previous years. The volume of transactions and the total value of transactions from 2017 to 2023 for transactions worth more than $1 billion are analysed. In 2023, 23 transactions worth more than $1 billion were concluded, while the average annual number of such transactions from 2017 to 2022 was about 10.

The total value of these 23 transactions was $146 billion, which exceeds the average value of transactions from 2017 to 2022, which was about $91 billion, but was distorted by Pfizer’s announced acquisition of Seagen in March 2023 for $43 billion. 

M&A deals continued to evolve into 2024, with four M&A deals announced in early January, two of which were worth more than $1 billion (JNJ’s acquisition of Ambrx for $2 billion and GSK’s acquisition of Aiolos Bio for $1 billion).

These early trends in M&A are encouraging and put us on the right track for 2024.

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