2021 and 2022 was the first back-to-back negative years for the S&P Biotech Select Industry Index since its inception.
How has biotech performed when it’s had a positive year.
Below is the SP Biotech Select Index (XBI) back to 2007 represented by the XBI: SPDR S&P Biotech ETF.
In this 16-year period, the index was up 11 years. In those 11 years, the average annual return was +28.77% (source: https://www.etfreplay.com/etf/xbi.aspx):
2/3/2023 | Q1 | Q2 | Q3 | Q4 | Annual |
2023 | 8.90% | ​ | ​ | ​ | ​ |
2022 | -19.72% | -17.37% | 6.80% | 4.64% | -25.87% |
2021 | -3.62% | -0.18% | -7.16% | -10.94% | -20.45% |
2020 | -18.58% | 44.59% | -0.39% | 26.49% | 48.33% |
2019 | 26.19% | -3.13% | -13.06% | 24.73% | 32.56% |
2018 | 3.44% | 8.57% | 0.79% | -25.15% | -15.27% |
2017 | 17.18% | 11.48% | 12.22% | -1.92% | 43.77% |
2016 | -26.32% | 4.77% | 22.64% | -10.68% | -15.45% |
2015 | 21.06% | 12.05% | -25.92% | 13.01% | 13.58% |
2014 | 9.67% | 8.51% | 1.65% | 19.86% | 44.98% |
2013 | 13.67% | 4.44% | 23.97% | 0.84% | 48.39% |
2012 | 21.17% | 9.96% | 5.58% | -5.68% | 32.69% |
2011 | 5.85% | 9.50% | -18.60% | 11.58% | 5.26% |
2010 | 11.76% | -13.64% | 14.68% | 6.25% | 17.60% |
2009 | -10.19% | 5.52% | 5.94% | -0.03% | 0.36% |
Continuing to the GFC:
2008 | -9.84% | 8.89% | 4.37% | -10.81% | -8.61% |
2007 | 4.57% | 5.70% | 14.11% | 2.29% | 29.02% |
It seems like the largest companies are flush with cash and facing pressure from shareholders and management to grow through acquisition. Thus, 2023 could see a nice and continued run of deals.