The COVID-19 pandemic has highlighted the importance of innovation in healthcare. However, this topic was on the agenda even prior to the pandemic, as healthcare costs have been rising sharply against a backdrop of increasing life expectancy. As Credit Suisse fund manager Thomas Amrein explains, deployment of new technologies is essential if costs are to be kept under control. With World Health Day just around the corner on April 7, 2022, he highlights the vast spectrum of potential investment opportunities in digital healthcare companies. For quite some time now, demographic aging has been a visible phenomenon. As a result of the sharp increase in life expectancy and major medical successes in preventing early deaths, it is only reasonable to expect an above-average increase in the proportion of very old people1. While this development represents impressive proof of scientific progress, it also poses a major challenge in the area of healthcare costs. After all, the longer people live, the steeper the trajectory of healthcare costs, above all to tackle the more common chronic diseases. Thanks to digitalization, we believe the healthcare system is on the brink of a revolution that may have the potential to reduce costs significantly.
COVID-19 provides valuable findings for healthcare The healthcare community was particularly challenged by COVID-19. All around the world, it led to greatly restricted access to healthcare institutions, especially during the first lockdown. A combination of the prolonged duration of the pandemic and the high costs of looking after sick patients in intensive care put an additional burden on medical staff, who were already overburdened. But COVID-19 also yielded many valuable findings for the healthcare system2. We are of the opinion that clinical studies are now more efficiently run, and researchers have increased their networks and collaboration. New procedures such as mRNA technology have shown how rapidly effective vaccines can be developed. In addition, both telemedicine and online pharmacies have started to establish themselves. If the rise in healthcare costs is to be slowed, this progress now needs to be built on.
Investing in digital health
In our view, the technology revolution in the healthcare sector offers numerous investment opportunities, as the field in which digital healthcare companies operate is very large. For example, the company Guardant Health specializes in blood-based rather than tissue-based diagnosis of individual cancers3. Not only does the diagnostic blood analysis give rise to less work and fewer costs, it is also capable of identifying cancer cells even before a tumor has formed. Dexcom meanwhile has developed a sensor for the ongoing measurement of blood glucose levels in people with diabetes, which provides automatic monitoring and an alarm function that alerts patients of their need for insulin injections4. As another example, a monitor developed by IRhythm allows the seamless monitoring of heart function parameters to best manage the treatment of cardiac weakness on an ongoing basis5.
1 Robert Koch Institute, 2015. Welche Auswirkungen hat der demographische Wandel auf Gesundheit und Gesundheitsversorgung? ["What repercussions is demographic change having for human health and healthcare provision?"]
https://www.rki.de/DE/Content/Gesundheitsmonitoring/Gesundheitsberichterstattung/
2 Boston Consulting Group, 2020. Five Lessons from the Pandemic for Health Care Systems.
https://www.bcg.com/publications/2020/five-lessons-for-health-care-systems-covid-19
3 Guardant Health, n.d. Transforming cancer care at all stages of disease.https://guardanthealth.com/about/ourstory
4 Dexcom, n.d. With Diabetes, Knowledge Is Power. https://www.dexcom.com/en-GB/about-dexcom
5 IRythm, n.d. Single-use Cardiac Monitoring. https://www.irhythmtech.com/