Outlook for Global Healthcare Companies - Serge Depatie - Natcan Investment Management Inc.
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Serge Depatie is a vice president, portfolio manager and security analyst at Natcan Investment Management Inc., which he joined in 2003. Mr. Depatie began his investment career in 1999. From 1994 to 1999, he acted as Medical Products Development Director of CQI-Biomed and Marketing and Sales Vice President of Biosyntech. Before arriving at Natcan, he also worked for Hampton Securities and Jitney Group as Life Science Analyst. Mr. Depatie obtained an MBA degree from Concordia University and a BS degree in Engineering from McGill University.
TWST: What investment themes have you been looking at, trends that you can exploit with investment possibilities?
Mr. Depatie: An important trend we're seeing is the, I would say, rejuvenation of biotech drugs in antibody classes. Monoclonal antibodies had a big market expansion in the mid to later 1970s to 1980s, and these drugs are being reformatted in a less toxic and more efficient manner. We're going to see a new wave of these biotech drugs, which should help the larger players to start off with and also to some extent the small biotechs. The leading player is Amgen (AMGN) there and it acts as a flagship to the industry. They have a new drug called denosumab for prevention of bone cancer, which represents potentially over a $5 billion market, which would basically reinvigorate the company and send it on a growth path again. If this drug works, and all indications are good and as the expectations become high and the stock appreciates well, it should pull all boats in the sector, in that other companies will also do well. We definitely have increased our activity in the biotech sector in the last year. Companies we've bought are Biomarin (BMRN), InterMune (ITMN), OSI Pharmaceutical (OSIP) and Orexigen (OREX). The disease sector is also an important aspect to look at. Obesity is definitely the new trend. What we're seeing in demographics is something that's got to be looked at seriously, and this includes diabetes. These are very big markets and we're seeing new drugs coming up and positioning themselves in the fight against obesity. We have a company called Orexigen in the portfolio that has Phase III data and that actually has two drugs in the obesity class that are very interesting. Cardiology remains another sector in disease, and I think on the medical device side there's a lot of growth being done there. Some smaller companies are able to displace the larger companies that are having difficulties such as Boston Scientific (BSX). We have companies such as Merit Medical (MMSI) who are upcoming in that area. Cardiology is a growth area. Merit Medical is a company out of Salt Lake City, Utah, and has very simple things. They basically have the only digital angiography pump monitor on the market. It's angioplasty agnostics itself to all angioplasty surgeons and it's just a pump. It's an auxiliary device in the medical industry and they've been growing by adding products that address smaller markets than what its bigger peers have to address. Boston will go after the billion-dollar market and Merit will go after the $100 million market, but because of its size and its execution, it's doing fairly well.
SERGE DEPATIE
Natcan Investment Management Inc.
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