The New Investment Frontier in Healthcare

Emerging technologies and the global pandemic have both positioned the healthcare sector for strong growth over the next few years. And with a number of compelling drivers set to play out, investors should be aware of the potential implications.

The COVID effect

While much has already been reported about the technology sector being one of the biggest beneficiaries of COVID ― thanks to the acceleration of behavioural trends such as online retail spending and working from home, Tim Rocks, E&P Chief Investment Officer, says the COVID effects could potentially be larger and more sustained in the healthcare sector.

“The pandemic exposed flaws in many healthcare systems, prompting many governments to rush preparations for the next crisis by building hospitals, critical care and local supply chains for drugs and critical devices. This has now led to significant R&D and investment in the sector, opening up new markets and players in the space,” he says.

“The sector was already set for strong growth due to ageing populations and rapid development in many emerging markets, but COVID has really amplified that trajectory,” he adds.

Emerging technologies and treatments

In addition to the impact of COVID, the sector continues to benefit from the forces of innovation, digitisation and disruption, which will only become more apparent in the coming years.

E&P Research have identified three key areas set to shape the way in which care and treatment are delivered in the future, which has the potential to significantly impact overall outcomes in healthcare.

• Digitisation: As many countries grappled with how to deliver health advice safely and securely amid a global pandemic, this paved the way for the widespread adoption of telemedicine. COVID really opened the door to the digitisation of medicine and there are many more technology-driven applications to come.
• Gene therapy: Gene therapy has been developed with the capacity to really revolutionise the treatment of chronic disease as it involves a switch from the “one-pill-fits-all” approach, to personalised gene treatments. It could be a major disruption to companies providing existing cancer drugs and treatments.
• Liquid biopsies: The introduction of liquid biopsies is expected to result in a major reduction in cancer mortality. Advances in DNA analysis are behind the development of a simple blood test that could detect multiple cancers such as pancreatic, lung and ovarian cancers at early stages of disease progression.

Healthcare’s perfect storm

The combination of a ‘perfect storm’ of factors now sees the sector on the cusp of a major wave of innovation and disruption, with COVID set to accelerate those trends and remove some of the regulatory inertia that has previously frustrated and slowed down change.

“Investors have been slower to consider these impacts and reflect them in equity prices, which is why we see the sector as one of the standout opportunities at the moment,” says Rocks.