What is Life Sciences and Should You Invest?

By Kirsteen Mackay


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Investment in Life Sciences has exploded in recent years. But what is Life Sciences? Read on to discover the nature-based opportunities in this field.

What is Life Sciences?

Life Sciences is an investment category all its own. But it may be new to you, so if you want to know “What is Life Sciences?”, you’ve come to the right place.

The term Life Sciences covers a multitude of investment themes, each with biology at its heart. Basically, anything involved in studying living organisms, such as plants, animals and humans, and life processes comes under the Life Sciences umbrella.

This includes biopharmaceutical, cannabis, psilocybin, medical manufacturing, genetics, and bioproduct stocks

What is Life Sciences?

The principal term ‘Life Sciences’ covers a spectrum of investment opportunities via companies involved in studying nature, living organisms and life processes.

The Life Sciences industry covers biotech, pharma, genetics, and medical devices. These are further differentiated by specialist research into psychedelics, stem cell biology, rare disease drug development and delivery and much more. 

The companies aim to make significant technological advancements to commercialize medications, therapeutics and devices. The road to commercialization usually requires substantial monetary investment in R&D, clinical trials, patent applications and a rigorous regulatory approval process. 

Companies operating in the Life Sciences domain are involved in many variations on the theme. Some examples include:

  • Re-purposing drugs to research already approved drugs for new disease applications

  • Medical and recreational cannabis, CBD and psychedelic medicine and therapeutic products

  • The treatment of a broad range of infectious diseases

  • Novel diagnostic testing kits and devices

  • Bio-technology research and development

  • R&D in genetics

  • Developing medical devices

  • Dietary supplements, food additives

  • Nutraceuticals (nutritional ingredients)

  • Cosmeceuticals (therapeutic cosmetics)

  • Food processing and design using chemistry, and microbiology

Interest in Life Sciences is Accelerating

The point of the Life Sciences sector is to improve the quality of life for individuals globally.

With COVID-19 putting health and wellness under the spotlight and climate change driving a need to innovate global food supplies, demand for an improved quality of life is soaring. 

Therefore, interest in Life Sciences has boomed in recent years, and innovation in the sector is accelerating. Rapid advancements in science and technology are transforming the food, cosmetics, and healthcare industries. Even governments recognize the need to embrace the sector and make it easier for start-ups to succeed.

For instance, In 2021, the UK government published a Life Sciences Vision directive. The purpose of its 10-year strategy is to make improvements that will help resolve major healthcare challenges of today, including cancer and dementia.

However, a lot of money is required to truly progress in this field, which is why investment banks are heavily investing in the Life Sciences space. For instance, Blackstone Life Sciences (BXLS) backs the pharmaceutical, biotech and medical technology companies involved in bringing much-needed medicines and technologies to market. 

Blackstone is involved in designing, funding, and executing clinical trials for products in late-stage development.

Craig Shepherd, Senior Managing Director with Blackstone Life Sciences, said:

The diversity of capital, resources and scientific expertise that Blackstone can offer is a clear differentiator. We are excited to continue partnering with leading life sciences companies around the world and to help grow their businesses.

Biotechnology is a Life Sciences Segment

Innovation is rife in biotechnology and has been for decades. The term biotechnology was used for the first time by Karl Erkey, a Hungarian Engineer, in 1919. Since then, biotechnology has come to signify the development of products that improve human health and the environment. 

Nowadays, biotechnology is concerned with merging engineering principles with biological science, using cellular and biomolecular methods to create new products such as medicines, vaccines, or food.

There are many publicly listed biotech companies with a medical slant. These usually rely on investment to fund their long-term vision of solving a medical problem, such as curing a rare disease, treating patients with debilitating conditions or lowering infectious disease rates.

Medical Devices are a Life Sciences Sector

The medical device market is another growing area of Life Sciences. To be deemed a medical device rather than a pharmaceutical product, it must have a medical purpose and is typically used by physical means. Medical devices can contain medicinal substances which are secondary to the product. Otherwise, it may be regulated as a pharmaceutical product rather than a medical device. 

Medical devices are used in diagnosis, surgery, therapy, and birth control. Examples of medical devices include stethoscopes and bandages, dental syringes, latex gloves, wheelchairs, neurostimulation devices, ultrasound imaging devices, some pregnancy testing kits, insulin pumps and insulin pens, breath testing devices, robotic medical technology, implantable pacemakers, and certain breast implants.

Some items such as gloves and masks may be classed as personal protective equipment (PPE) rather than a medical device, depending on the intended use.

The medical device market is fast-paced to keep up with advancements in modern medicine. 

Take the COVID-19 pandemic, for instance. Delivering treatments and vaccines on such a vast scale required product and device design. Companies had to deliver diagnostic kits, antigen tests, vaccines, face masks and protective gear.

Many medical technology companies are developing devices, and some major pharmaceutical companies have medical device divisions.

Genetics is a Life Sciences Segment

Genetics is the study of genes, their traits, and hereditary conditions. Genetics is an overarching term that covers classical genetics, molecular genetics, and evolutionary genetics. This is further subdivided into multiple areas, including DNA sequencing, genetic testing, gene therapy and genomics.

Genetics is a hugely important Life Sciences field because it drives the research that could lead to life-saving medications.

In recent years genetic testing has gained popularity as people become more fixated on longevity and maintaining their health. 

Cannabis is a Life Sciences Sector

As legal and regulatory restrictions eased around cannabis in Canada and the US, demand for cannabis and its derivatives soared. Now there are a multitude of cannabis stocks to choose from. Furthermore, using cannabis to benefit patients is becoming widely recognized as more medical breakthroughs and scientific evidence come to light.

Psychedelics is a Life Sciences Segment

Like cannabis, psychedelic compounds such as psilocybin (found in magic mushrooms), ayahuasca, DMT, LSD and ketamine are also gaining traction as potential treatments for long-term health problems such as PTSD and treatment-resistant depression.

Should You Invest in Life Sciences?

Life Sciences is an exciting area of investment. As it is heavily focused on research and development, many start-ups exist in this space. That makes investing in Life Sciences a riskier venture. However, high risk can mean high returns, which is why the Life Sciences segment features many popular stocks.

Share price volatility is to be expected in the Life Sciences sector. But investors can play it safe by buying shares in the prominent players operating in the space.

Eli Lilly And Co (NYSE: LLY), Johnson & Johnson (NYSE: JNJ), Roche (OTCMKTS: RHHBY), and Pfizer (NYSE: PFE) are all considered large-scale biotech companies.

Along with major biotech leaders, exchange-traded funds (ETFs) specialize in the sector. If you're concerned about volatility, an ETF can dilute the risk of holding shares in a single company.

  • Health Care Select Sector SPDR Fund (NYSEARCA: XLV)

  • iShares US Healthcare ETF (NYSEARCA: IYH)

As you can see, there are many opportunities to invest in the field of Life Sciences.

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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