These changes have important implications, not just for policymakers, but also for investors. How and what people do to prevent and treat disease matter at a financial level.
Here are just some of the ways things have changed:
Covid-19 has sped up changes in healthcare consumption patterns. For example, more people are now focused on their wellbeing – addressing both mental and physical health.
The pandemic has forced people to think about how they use healthcare in terms of access, cost and convenience.
The virus also shone a spotlight on healthcare systems across the world. Shortages of hospital beds, equipment and other infrastructure failings were acutely visible in many countries.
Mother of invention
After a shaky start, the world adapted to this new reality in extraordinary ways. We have seen the development of a number of safe and effective vaccines in record time – often using ground-breaking mRNA technology.
This period has also produced promising findings from the first human clinical trial involving gene-editing CRISPR technology to treat disease, and smartphone-connected heart pacemakers made their debut.
Before Covid, we saw mobile and digital health advancements across the healthcare industry, but these have been expedited. Online appointments have shifted demand towards virtual consultations and e-pharmacies.
The populations of many countries are living longer and demographic profiles are changing. While this has been a problem in developed markets for some years now, many emerging markets (e.g. China) are also under the same pressure as birth rates languish.
People in many developing countries have been getting wealthier and much has been written about the rise of the middle class in many of these places. Higher disposable incomes mean that more money can be directed into diet, exercise, health insurance, as well as better medical coverage.
As populations age and people live longer, there will be an inevitable increase in demand for healthcare. What’s more, older populations are likely to increase the amount they spend, in both relative and absolute terms, on their health.
So where are the opportunities?
Investment in healthcare services and systems will be crucial when it comes to meeting growing consumer demand and expectation of higher-quality care. There are opportunities in both public and private markets.
By investing in private markets, investors can gain direct exposure to healthcare infrastructure. Such investments offer resilient and stable long-term yields – a key element in building a strong portfolio with risk-adjusted returns. Opportunities that we’ve identified include:
- Designing and building new hospitals;
- Investing in medical diagnostic laboratories;
- Investing in retirement communities
Additionally, investment in innovative health and wellness technology can help to address key issues such as affordability and access. Opportunities here include:
- Virtual health apps;
- Telehealth services;
Looking forward, in public equity markets we foresee major developments in the cell and gene therapy industry, which bring the promise of:
- Advances in prevention and treatment of diseases;
- Advances in drug development;
- Personalised medicine;
- Food sustainability
The cell and gene therapy industry is set to grow at a compound annual growth rate (CAGR) of 34% from 2021-2027. The US Food and Drug Administration predicts that it will be approving some 10 to 20 cell and gene therapy products each year by 2025, compared to a total of just 21 as of September 2021.
We are also excited by the medical technology (medtech) market. The future medtech landscape is likely to be one that is connected, automated, and delivered virtually thanks to digitisation, artificial intelligence and mobile and/or wearable devices.
Finally, we are observing an evolution of the pharmaceutical industry. There is a gradual shift away from treatment and towards preventative and personalised medicine. These pharmaceutical firms are also increasingly embracing disruptive technologies, such as artificial intelligence and big data analytics, in the drug-discovery process.
Where we’ve made investments
- British biotechnology firms enabling scientists to sequence the genomes of humans, animals and plants;
- Chinese healthcare services companies discovering and developing revolutionary drugs for dermatological and auto-inflammatory diseases;
- North American healthcare equipment manufacturers designing and building robots that make various types of surgeries faster, cheaper and safer;
- Latin American new hospital developments helping to increase capacity and meet the growing demand for access to healthcare in that region
Amid all these changes, there will be important questions that we will need to ask and answer as a society.
For example: to what extent do we allow robots to carry out our surgeries? What level of gene editing are we comfortable with? How do we ensure equality among genders and ethnicities in the emerging field of personalised medicine?
However, the pandemic has shown us that when we collaborate, we are capable of overcoming immense challenges. As an industry, we look forward to playing our part.