With FIFA World Cup 2026 on the horizon, football fever is once again beginning to build. This build-up has prompted a thought – that football and biotechnology investing may have more in common than many people might expect. Ailsa Craig and Marek Poszepczynski, portfolio managers at International Biotechnology Trust (IBT), share their insights on biotech.
Like football, biotechnology investing is, at its heart, a simple game. The goal is straightforward – identify the most innovative companies, back the best science, stick to a disciplined approach and respond decisively if conditions change. And like football, the gap between understanding the basics and mastering the art is vast. Doing it at the highest level demands deep expertise, patience and a particular kind of conviction that is rare and, when applied well, genuinely rewarding.
Healthcare’s Premier League
At the top of the healthcare industry sit the giants – the large, established pharmaceutical companies whose scale, resources and global reach place them in a league of their own. Like the Premier League’s dominant clubs, they don’t always build from the grassroots up. Instead, they often acquire – buying in the most promising talent once it has proven itself, rather than developing it themselves.
Below them, a diverse ecosystem of smaller, specialist biotech companies does the hard work of early-stage innovation. These are similar to football’s feeder clubs – developing the science, running the trials and producing the breakthrough assets that the giants ultimately want to own. These biotech companies now provide around 70% of the new “talent” – drugs that go on to be successfully approved by the FDA.
The transfer market
The mechanism that connects these two worlds is merger and acquisition (M&A) activity – and here the parallels with football are particularly striking – especially if you compare a football club to a pharmaceutical company working to secure its future revenues. In football, the transfer market is where the big clubs secure the talent they need to compete. In biotech, that role is played by M&A, with pharma companies deploying their considerable balance sheets to acquire the innovative assets they need to replenish their pipelines.
The need has never been more pressing. Just as a football club cannot rely indefinitely on an ageing squad, the world’s largest pharmaceutical companies are facing the expiry of patents on many of their most valuable drugs – a patent cliff that threatens more than $300 billion of revenues between now and 2030. Unable to replace those revenues through internal research alone, they are increasingly turning to the transfer market, acquiring the most promising biotech assets before the competition does.
The parallel runs deeper still. Just as a footballer’s peak years are finite, so too is a drug’s period of market exclusivity. Newly granted patents usually have a 20 year duration, but around ten of those have passed before the assets become revenue producing. It’s similar to the trajectory of a young footballer joining an academy as a young teen. Once a patent expires, the commercial window largely closes – and the search for the next generation of talent begins again.
When the big clubs come calling, they tend to pay handsomely for the right asset. Fans of the selling club may lament the departure of a favourite player, but the financial terms of the deal are rarely a disappointment. The same is true in biotech – acquisition premiums can be substantial, and for investors in the target company, a bid can realise significant and immediate value. While the largest clubs might compete for the superstar players, in the next tier down, mid-tier clubs, or in the biotech analogy, mid-cap pharma companies or larger biotech companies, are purchasing assets that might not have attracted so much attention but will generate similar returns for their backers.
Assembling the squad
The analogy works even better when you compare the IBT portfolio managers’ selection process to a football manager building his squad. That skill – knowing what to buy, when to buy it, and at what price – is ultimately what separates a good manager from a great one. Both the biotech portfolio manager and the football manager are ultimately in the business of assembling and managing a team – balancing different types of asset, adapting to changing conditions and making difficult decisions about when to back a player and when to move on.
The IBT portfolio is constructed with that balance in mind. Our more established, cash-generative holdings are the portfolio’s defenders – businesses with approved therapies and predictable revenue streams that can hold their value when conditions become difficult. Companies in their prime growth years – dynamic businesses in the early stages of commercialisation, delivering strong returns for the portfolio – are our midfielders. And our attackers are the earlier-stage, higher-risk names where the science is most exciting, and the potential upside is greatest.
The real skill – for a football manager and a biotech investor alike – lies not in buying what everyone already knows is exceptional. It lies in identifying that potential early, before the price reflects it. The cheap signing who becomes a star. The undervalued biotech whose science is more innovative and further ahead than the market appreciates. That is where specialist knowledge and experience pay off – and it is what we look for every day.
There are the super-substitutes – smaller positions in companies whose potential is mispriced or not yet widely appreciated by the market. Like a substitute the opposition knows little about, their capacity to disrupt and have a significant impact is often underestimated. Terns Pharmaceuticals is a recent example of exactly that kind of impact from the bench. Acquired by Merck earlier this year for up to $6.7 billion, the holding delivered a return of close to 18 times our initial investment in under twelve months.
As well as bringing together the best players to create a team, a good manager needs to be able to make the decision to drop a player, or sell an asset, when it becomes clear that they have reached their peak or are not living up to expectations.
Team tactics
Assembling the right squad is only part of the job. The best managers also know that tactics must adapt to the opposition. A side that plays the same way regardless of the opponent will not win many trophies. A good manager sets up very differently against Liverpool than against Accrington Stanley (apologies to any Accrington fans reading this).
In biotech, the equivalent is positioning the portfolio for the environment in which we are operating. When, as was the case in 2021, the macro backdrop is challenging, we can field a back five by tilting the portfolio more towards defensive holdings. By contrast, when, as we see today, conditions are benign and investor appetite for the sector returns, we can afford to be more expansive, with more attacking options.
We also take a basket approach in early stage development areas. Where we have high conviction in a therapeutic area but there is still uncertainty about which company will ultimately prevail, we build diversified exposure across the most promising assets. This is similar to how a club’s academy might recruit many promising young strikers, with a view to whittling down the pool to just the most talented players over time. The best ones may be acquired by other clubs, or join the home team, but either outcome is a success for the club.
The unexpected
Even the best-managed sides suffer setbacks. The underdog can unexpectedly win the match. A key player can pick up an injury at a critical moment. Form may desert a player that looked unstoppable weeks earlier. Sometimes the setback is temporary – a spell on the sidelines before a return to full fitness. Sometimes it ends a career.
Biotech has its equivalent in clinical setbacks. A trial that fails to meet its endpoints. A regulatory delay that pushes back a launch by months or years. Occasionally, a safety issue serious enough to halt a programme entirely. These are the risks of the investment world – unpredictable, sometimes severe, and an inescapable feature of the landscape.
Managing these risks is central to what we do. It does not eradicate uncertainty, but it meaningfully improves the odds of success. Rigorous due diligence underpins every portfolio decision – much as a football manager studies the opposition, analysing their strengths and weaknesses meticulously before a game. We are constantly monitoring our portfolio companies’ assets in comparison with the opposition and if we are impressed by a star player that is not on our team, we may seek to include them in our squad in place of our current player.
Diversification helps too – no single setback should be enough to derail the portfolio. Careful position sizing matters, particularly as a company approaches what we call a binary event – a clinical trial readout or regulatory decision where years of development coalesce at a single point in time. In football terms, this could be compared to an upcoming medical for a key player. You might choose to drop him from the team or at least sit him on the bench for the match until the results of the medical are known. If the medical proves he is fit, he can rejoin the team for the next match, but by not playing him until you know the results, you avoid compromising the team by having a potentially unfit player on the pitch.
A game worth playing
In football, they say form is temporary, class is permanent. The same is true in biotech – markets will always be subject to short-term sentiment, but the most innovative science will always find the right price in the fullness of time.
Biotech investing and football management have more in common than a passing glance might suggest. Both reward patience, specialist skills and the ability to see potential where others do not. Both punish complacency and demand constant adaptation. And in both, the difference between a good outcome and a great one often comes down to the quality of the decisions made long before the final whistle.
For investors looking for exposure to one of the most dynamic and innovative sectors in the world, we believe IBT offers a compelling way in – actively managed by portfolio managers who have spent years learning to build a winning side.
