The Evolving Economy

Post-COVID-19, innovation in healthcare is here to stay

As the coronavirus pandemic has developed, we have been inspired by the coordinated response of healthcare providers, diagnostic testing companies and the biopharmaceutical industry. Companies are applying new technologies to this challenge with unprecedented results that highlight the strength of innovation across the entire healthcare arena. The unshakeable conclusion from the current crisis is that the demand for healthcare products and services will continue apace aided by ageing demographics, increasing morbidity from ‘lifestyle’ conditions such as obesity or diabetes and a growing need for cutting-edge technologies and therapies in preparation for future pandemics.

In the short term, demand has fallen for some areas of healthcare as a result of social distancing measures and the lockdowns. Patients and doctors have been forced to postpone appointments and procedures for non-urgent conditions. We have seen a significant fall in routine lab testing volumes as physician visits have ground to a halt and many elective surgeries such as hip and knee replacements, dental implants or cataracts have stalled.

Over the long term however, these operations cannot be postponed indefinitely. Demand for healthcare should normalise as economies open up and distancing measures start to reduce - and spending on medical infrastructure in particular is likely to experience a short-term boost to ensure better preparedness for future pandemics. While many healthcare companies have withdrawn financial guidance for the year due to the virus outbreak, several industries have flourished as demand for their products and solutions have accelerated.

The diagnostics sector has seen exceptional demand. Testing for coronavirus will be critical to unlocking the economy and getting us back to a more normal environment.

There are two types of testing. The first type tests for the presence of genetic material from coronavirus, which will give a clear indication of a current infection - but doesn’t tell us about the number of people who have already been exposed to the virus ,or the nature of that person’s immune response to the virus.

The second type of test helps answer those types of questions – this is known as serology testing. It could also give an idea of whether people who have already had coronavirus are now protected from a repeated infection. Many companies have been involved in bringing these tests to market including some of the most prominent names in the field like Roche, Abbott and Hologic.

Just as remote working has been rapidly embraced, COVID-19 has accelerated the adoption of several new technologies such as telemedicine or remote patient monitoring. Digital visits can be used to diagnose non-emergency medical conditions like allergies, influenza, colds, fevers and rashes. Physicians can seamlessly also prescribe medications and send prescriptions to local pharmacies for pickup or delivery in the mail. Consequently, digital health companies like Teladoc, American Well and Doctors on Demand have seen strong adoption of their services as patients have embraced the use of virtual appointments as an alternative to face-to-face interactions to reduce the spread of COVID-19.

We think this is a long-term structural shift and the penetration of telehealth is likely to increase even in a post-pandemic environment.

In the med-tech arena, companies like Medtronic, Philips and Masimo along with several others have seen increased demand from Intensive Care Units for ventilators, monitors and sensors to help manage infected patients. New technologies have also been launched including a wearable wireless sensor that enables monitoring by clinicians of less severe patients in their home thus reducing the exposure of patients and doctors as well as preventing a surge in patients overwhelming emergency departments.

Healthcare and healthcare spending are constantly evolving - new treatment options that improve the standard of care change treatment outcomes and demand for different therapies. We focus on finding companies that invest significantly in research and development to develop solutions for conditions with high unmet medical need. We believe companies that succeed in solving the most complex healthcare challenges will find its products appreciated by patients, physicians and payers.

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