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. Amrein believes that deployment of new technologies is essential if costs are to be kept under control.
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 people. While this development represents impressive proof of scientific progress, it also poses a major challenge in the area of healthcare costs. The longer people live, the steeper the trajectory of healthcare costs, above all to tackle the more common chronic diseases. Thanks to digitalisation, 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 system. “We are of the opinion that clinical studies are now more efficiently run, and researchers have increased their networks and collaboration,” said Amrein. “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.”
Investment universe covers entire value creation chain
Amrein continued: “Despite strong growth rates, we believe the digitalization of the healthcare sector remains at an early stage of the growth cycle, which could make it attractive from a long-term investment standpoint. In our view, the volatility in the valuations of these stocks is due to the current market uncertainties and does not cloud the positive outlook for digital healthcare technologies. We view the US as the largest growth market, but also see considerable potential in China, Japan, and Switzerland. The investment universe can essentially be broken down into three areas: research and development, innovative treatments, and efficiency improvements. Together these form the eco-system of digital healthcare technologies. Only interaction between these three areas may result in the kind of solutions that could benefit both patients and those having to fund healthcare costs. We therefore believe it is essential to invest in the entire value chain.”
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