Historically, the pharmaceutical industry has focused on developing blockbuster drugs for the masses, taking a one-size-fits-all approach. But as we’ve learned more about the role genetics play in inheriting and treating diseases, the opportunity has arisen to treat people in a more targeted way.

This is personalized medicine, which involves getting the right drug to the right patient at the right time, and there are three primary areas of focus: gene therapy, cell therapy, and gene editing.

Personalized medicine should lead to better patient outcomes and economic outcomes.

Gene Therapy

Gene therapy modifies or replaces existing genes, paving the way to cure hereditary diseases. One gene-therapy drug, which treats a hereditary retinal condition that can lead to blindness, is available today. We expect to see at least two more gene-therapy drug approvals in the United States and Europe in 2019.

Cell Therapy

Cell therapy involves the transplantation of human cells back into the body to replace or repair damaged cells or tissue.

One of the most common forms of cell therapy used today is CAR T-cell therapy, in which cells are extracted from a patient’s body, modified in a laboratory to attack cancer cells in the blood, then reinserted into the patient’s body.

CAR T-cell has distinct advantages over other treatments, including that it’s given once and stays in the body, reducing hospitalization time and automatically treating recurrences of the cancer. There are two approved CAR T-cell drugs available today, each treating a different type of blood cancer.

Gene Editing

Lastly, gene editing gives scientists the ability to change an individual’s DNA. Genetic material is added, removed, or altered at particular locations in the genome.

Gene editing took off in 2012 with the discovery of CRISPR-Cas9 technology, which is faster, cheaper, more accurate, and more efficient than other methods.

Although it’s not quite as advanced as other gene therapy and cell therapy approaches, gene editing has a variety of applications. For example, with gene editing we could alter humans’ DNA to make them resistant to certain diseases (like malaria) or even prevent them from acquiring certain diseases (like cystic fibrosis).

Investment Implications

Personalized medicine should lead to better patient outcomes and economic outcomes, because we won’t be giving drugs to patients who might not actually benefit from them. And there are several investment implications.

First and foremost, the pharmaceutical companies that produce and sell these therapies will be watched closely, and there will be challenges along the way. There are complexities in the production, supply chain, and delivery of these drugs to patients that must be resolved, for instance. And new payment models will have to be developed, as these are very expensive but one-time therapies.

We also think there will be opportunities for investors beyond the pharmaceutical companies. For instance, there will also be a greater need for equipment and supplies in the production of these therapies and the supply chain in terms of delivering them, and there will be companion diagnostics.

It will be a fascinating area to watch unfold over the next several years, and we expect there to be opportunities for healthcare investors globally.

Watch Tommy Sternberg, CFA, explain why personalized medicine is the way of the future.

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus and summary prospectus, which you may obtain by calling +1 800 742 7272. Read the prospectus and summary prospectus carefully before investing. Investing includes the risk of loss.

Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2019 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

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