In 2019, the possibility that a large chunk of the population outside of the medical industry would understand what an mRNA vaccine is, would have seemed a little far-fetched. And yet, now in the second half of 2021, many ordinary people have become acquainted with some of the more complex issues around vaccine technology—such is the effect that the pandemic has had on our relationship with healthcare.
The events of the last 18 months have accelerated and shaped a number of trends in healthcare technology and services, to a point that even if the long awaited “return to normal” comes, many of these changes will remain around for the long-term. The aging populations of advanced economies across Japan, China, Europe and even here at home in Singapore, combined with an ever-increasing focus on individual wellness, will create a strong demand for new and innovative approaches to healthcare.
Just take a look at the growth of share prices of vaccine creators Pfizer and Moderna to date. These companies are now reaping the benefits by building on decades of research and development they have invested in, and are delivering important vaccines to save countless lives at this crucial moment. There are companies working on advancements right now that, in the not-too-distant future, will parallel the importance of COVID-19 vaccines.
So, where are these other pockets of opportunities that haven’t been fully realised?
New technologies, challenges, and opportunities
Even though the healthcare industry has traditionally been associated with considerable innovation and growth, the emergence of new technologies in tandem with societal changes is set to substantially expand the impact that healthcare companies can have on our lives and wellbeing. In short, the best is yet to come.
Let’s start with the example of the aforementioned mRNA vaccines. What makes mRNA vaccines an interesting proposition is that the technology behind it, without going into too much detail here, allows for a basic “platform” to be manipulated relatively easily with the genetic sequence of a virus—an advance which is slated to substantially cut the development time needed for new vaccines. Scientists believe this could be the key to creating vaccines suited to some of the most enduring health challenges, such as HIV, cancer, and malaria, which would be truly revolutionary. At the same time, there are other new and emerging technologies that hold similarly disruptive promise, such as 3D organ printing, stem cells, and genomics (more on this later).
The way that we conceive of and interact with healthcare is also changing, and in many cases this is being facilitated by technological changes happening outside of the industry itself. The pandemic (and its associated lockdowns) have necessitated the rise of telehealth services; according to McKinsey, in the US alone these services could be worth US$250 billion annually, having seen a 38-fold increase in uptake since early 2020. Locally, private telemedicine providers have been tapped to reinforce the Ministry of Health’s (MOH) handling of Covid-19 patients on home recovery. With the upheaval during this time, mental health issues have also come to the fore, and this has spurred on an expansion in remote counselling services and platforms.
Meanwhile, the opportunities for individuals to proactively take control of their health are expanding—this can be seen particularly in the explosion of wearable devices. Most smartwatches currently offer at least some basic health tracking functionality, such as heart rate monitoring, but these devices are becoming increasingly sophisticated in what they can track, with some able to conduct electrocardiograms, or monitor for signs of sleep apnoea. It’s likely that these products will play an increasingly central role in health management in the future, with their data able to be used by healthcare professionals to diagnose and treat issues, or to offer more holistic advice on health management.
These advances are set to seriously upend the industry landscape, and virtually no one will be untouched by the benefits they’ll bring. But there is one technology that might prove to be the most disruptive of them all.
Genomics, the new frontier of healthcare innovation
In the world of healthcare right now, there are companies that are paving the way for a revolution in health through advancements in genomics. Since the mapping of the human genome two decades ago, it’s been clear that by understanding the genome, we can start to unlock some fundamental information about our health and wellbeing, which will have major implications in the speed of diagnosis and treatment of diseases and disorders.
As an example, some of the leading companies in this area are building products that can screen DNA for multiple cancers, giving them the potential to transform early cancer detection. While the applications are plenty, one thing is for sure – scientists say that we are still at the very beginning of our journey and more research is underway. The future potential for genomics, combined with advanced technologies, to solve some of the toughest problems in medicine is set to explode in the coming years.
A diversified and long-term play is recommended
It is important to note that when it comes to research and development, not all companies will successfully turn their scientific discoveries into commercially viable businesses. Therefore, diversification across the healthcare subsectors of genomics, biotechnology, pharmaceuticals, healthcare services, and medical devices, is recommended.
Moreover, investing in healthcare requires a long-term view. It can take many years of research and clinical trials for companies to successfully bring a drug or treatment to market. On average, only one in 10 drugs tested on humans are approved for use. Therefore, the best way to ensure better risk-adjusted returns across the full spectrum of healthcare is to invest in a basket of these companies to benefit from the overall growth, rather than actively trying to pick winners or losers.
Advancing the quality of human life through your portfolio
It may seem like some investing in healthcare involves placing a bet on heretofore unproven technologies, but one only needs to look at the FAANG companies (Facebook, Apple, Amazon, Netflix, and Google) to realize that they’ve only gotten to where they are today because of a 20+ year foundation built on chips, PCs, network, operating systems and more.
It is likely that the first healthcare company with a trillion-dollar market cap will emerge in this decade, given that some of the technologies currently under development could markedly improve the quality of human life for millions of people. However, with the pandemic spurring on a more widespread appreciation for health and wellness, even those companies that are simply making improvements on their products and services—rather than reinventing the wheel—still present strong growth opportunities.
Investing in healthcare companies isn’t just about financial gains—this capital is also going towards creating a healthier, happier world, and potentially ending some of the most devastating diseases that humans have as yet been unable to conquer. If you want front row seats to the exciting growth potential, it’s worthwhile starting now with a portfolio with exposure across the healthcare sector.
This opinion piece by Dhruv Arora, CEO and Founder of Syfe, was first published in The Business Times.
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