>>> An investment opportunity in blood plasma?
Fidelity Insights
by Jed Weiss
February 5, 2020
"Plasma-intensive treatments are greatly needed, and yet there is a shortage of donation facilities for blood plasma, which is why I've been drawn to existing plasma processors," says Jed Weiss, portfolio manager of Fidelity® International Growth Fund ( FIGFX ).
The supply of raw plasma has run short in recent years because producers cannot keep up with demand, according to Weiss. That's partly because proteins contained within plasma cells are helping to treat a growing list of neurological and immune disorders, as well as other chronic diseases.
Weiss says 3 companies, Australia's CSL Limited ( CMXHF ), Spain-based Grifols ( GIFOF ), and Takeda Pharmaceutical ( TKPHF ), in Japan, control nearly 90% of the US market for plasma-derived intravenous immunoglobulin, which is used to treat many different health conditions.
"I believe the market has significantly underestimated the growth opportunity for the industry, as well as its price resilience," Weiss says.
More companies could enter the plasma market over time, according to Weiss, but he thinks it's somewhat unlikely because of the regulatory difficulties of setting up new blood-collection centers and the high costs of building a blood fractionation facility.
As of December 31, the fund owned a significant stake in CSL, which has been taking market share and gaining cost efficiencies by running its own home-grown collection and processing facilities.
In addition, Weiss notes that CSL has been able to leverage its knowledge of plasma to develop a range of potential new drugs, including a drug in late-stage trials to be administered immediately following a heart attack to help prevent recurrence.
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