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Michael Walsh is a biochemist with training in corporate finance from working at Robertson Stephens and Drexel Burnham Lambert. So he is in a very good position to be running a biomedical hedge fund. For the past 11 years he has been doing just that at Kilkenny Capital Management. Kilkenny manages a long/short biomedical fund following more than 250 companies in the high-margin biomedical space. It’s a good market to be in. According to Walsh, the number of biotech companies has tripled in the past 10 to 20 years. Healthcare spending in the US now accounts for 16% of GDP, and about 10% of this expenditure is in the innovative biomedical sector. Demographics in the US suggest that there will be further growth in the area. “Most healthcare costs occur in the later years of a person’s life,” says Walsh. “Healthcare spending in the next few years will become a seriously growing portion of GDP as the baby boomers get older. Developments in molecular biology will foster unprecedented innovation, thereby fuelling a greater share of spending in healthcare.”
The universe of biotech companies that Kilkenny looks at is limited to those with suitable market capitalization, focusing on regulated medical innovation.
