We examine the longer-term impact of the virus on the health-care sector.

  • The Covid-19 pandemic will accelerate change within the health-care sector
  • Health care will increasingly shift from inside to outside hospitals
  • The demand for telemedicine is likely to grow exponentially
  • Pharmaceutical firms will be under pressure not to profit too much from a vaccine

Our last blog examined the immediate impact of the Covid-19 pandemic upon the health-care sector, but it is also worth trying to look through the current crisis to understand what the longer-term implications might be.

Change in the sector takes time to play out, but we believe that the unprecedented impact of the current pandemic will have the effect of accelerating many of the long-term health-care trends that we have already identified through our healthy demand investment theme. We look at these below.

A Shift Away from Hospitals

The way we access health care has not changed in the last 1,000 years, but huge advances in diagnostics, medical devices and disease prevention mean we are seeing the focus change from delivery of services to patients within hospitals to being able to receive much of our care remotely. We are currently witnessing intense pressure on hospital beds as the number of seriously ill Covid-19 patients grows, but when conditions eventually ease, we would still expect to see an acceleration in the shift of care away from inside to outside the hospital.

It is already proven that treating patients with chronic conditions such as diabetes, Alzheimer’s, cancer or heart disease within hospitals is the most expensive and also the lowest-quality way to administer care. Health-care systems have already started to move people away from in-hospital care, but the growth of alternative methods of treatment should help to facilitate this trend, with areas such as remote monitoring continuing to gain traction. A good example is a coin-sized ‘sticker’ that can monitor the glucose levels of diabetics for 14 days to ensure blood-sugar levels remain within a safe range, and which can be scanned via a mobile phone; it is a lot more pleasant and accurate than the traditional finger-prick testing that many diabetics currently receive.

There will be huge pressure for people to have access to telemedicine, enabled by remote diagnostics and better technology. We would also anticipate a marked shift in how health-care companies market their medicines, so that instead of travelling to sell face-to-face, many more drugs will be sold online to doctors via virtual social communities.

Testing Crucial

The ability to undertake virtual appointments to diagnose underlying and immediate health issues should continue to grow, even as the pandemic eases. Telemedicine can already offer apps that can provide ‘mole-mapping’ services remotely to patients, for example, but the current crisis has highlighted just how crucial testing is. We would expect those companies that provide the components needed for mass testing, such as chemicals and swabs, to continue to see heightened demand for their products in the future, now that health-care systems are recognizing the importance of fast and reliable diagnosis.

Need for Vaccines

The urgent hunt for a vaccine to beat coronavirus highlights how most health-care systems have had minimal capacity for the manufacturing of vaccines, and have often been completely reliant on the private sector to provide them. Once a successful vaccine is created and proven to treat the current pandemic, every country will want access to it; it will inevitably become hard to get sufficient amounts of the vaccine to where it is needed in a timely manner. Countries may have to compete against each other and will have to look harder at how they gain access to new vaccines; we have already seen the European Union looking to work together to find a vaccine, but also to negotiate as a bloc to buy any potential vaccine that does emerge. 

For the Greater Good

For those companies that do eventually find a vaccine for Covid-19, it is debatable as to whether they will ultimately profit materially from their success. While pharmaceutical firms will have plenty of goodwill right now, they will also be acutely aware that with the eyes of government and the general public on them, they cannot be seen to be profiting too much from the current situation, when the broad consensus will be that any success should be for the greater good of all.

Change in the health-care sector often occurs at a glacial pace, but we do believe that the current tragic events will act as an accelerator of the trends mentioned above, just as we expect to see levels of funding to health-care systems increase over time; many regulators, along with politicians, companies and individuals will be pushing to make this a reality.

Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice.

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