The first quarter of 2021 was challenging for investors in biotechnology, but Franklin Equity Group Portfolio Managers Evan McCulloch, Wendy Lam and Akiva Felt believe the second half of the year will likely bring welcome tailwinds for the industry.

Innovation has always been a key driver for the biotechnology industry. Even in the midst of the COVID-19 pandemic, there is still significant progress in the discovery and development of innovative drugs.

Health care reforms are always a popular topic of discussion ahead of a US presidential election campaign, where politicians talk about proposed changes that can be very different than the current system.

Changing political policies and priorities can impact certain market sectors-for better or worse. Health care costs and prescription drug pricing were hot-button issues in the United States during the 2016 presidential election, and the Trump administration has been pushing forward its own health care agenda. So far this year, the health care and biotechnology (biotech) sectors have shaken off uncertainty, but are investors too optimistic? Franklin Equity Group's Evan McCulloch says drugs actually behave more predictably than politicians-but he sees reasons to affirm the market's positive outlook.