Healthcare Winners and Losers

Coverage of the 2018 Global Investment Conference

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needleHealthcare systems around the world are dysfunctional, says Julia Angeles, investment manager at Baillie Gifford, who explains that current treatments all too often focus on “sickcare”— addressing the symptoms of disease rather than the underlying causes.

This is changing thanks to advances across a range of disparate technologies, including gene sequencing and exponential increases in computing power, artificial vision, data analytics, machine learning, and wearable technology.

This shift will have a considerable impact on traditional parts of the market, says Angeles. “Trillions of dollars of large pharma’s market cap are now up for grabs because these companies underestimate how the convergence of different technologies will change healthcare.”

Investment Implications 

As practitioners are able to begin to understand and manage the underlying causes of diseases, there are many opportunities for investors. Angeles provides the example of diagnostics, pointing out that ultrasound machines are safe and widely used to diagnose illness — but they’re also costly and hard to move around, and expertise is required to operate them.

Advances in sensors and material science mean that new devices, such as the iQ made by Butterfly, are the size of a smartphone. And, improvements in machine vision and data interpretation mean that no training is required to understand the images generated. These machines are also 100 times cheaper than traditional ultrasound scanners.

“This technology can revolutionize healthcare by providing access to ultrasound technology,” Angeles explains. The impact on the developing world will be significant.

Cancer care is another space where traditional models have failed. Angeles explains that, in the future, cancer could be treated with two simple drops of blood — one for a routine screening to identify the disease and another for the purposes of cell therapy, which can supercharge the immune system.

The shift away from ineffective treatments like chemotherapy to cell therapy will be transformational for patients, Angeles says. Patients may be freed of cancer before any symptoms manifest themselves and without any side effects of aggressive treatments.

Ultrasound technology and cancer care are just two fronts where the healthcare revolution is making significant inroads — but there are many more.

“Everything is changing and quickly,” Angeles notes. Future winners will emerge as we move away from traditional systems, dominated by big pharma companies treating chronic diseases, to a world where prevention and cure will become an integral part of healthcare.

Angeles urges investors to assess their exposure to healthcare and think about whether they are positioned to benefit from this revolution.

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