It may seem confusing that the areas of the market that have contributed most to overcoming Covid-19 (healthcare) are struggling to invest.

to see AstraZeneca.. One of the heroes of vaccine production, FTSE All-Share has increased by more than 18%, compared to 3% over the past year. The same is true for other major pharmaceutical companies. PfizerIn the United States, it is up 22.5%, compared to almost 38% for the S & P 500.

It’s not just a handful of Big Pharma stocks that are lagging behind. In the year leading up to the end of May, the MSCI World Healthcare Index was wrapped by the MSCI World Index. It was an increase of only 18%, compared to 41% for the broader index.

We had previously suffered this kind of slump when Hillary Clinton tried to keep drug prices down during her husband’s presidential era in 1993, and when Obama signed a patient protection and affordable care law in 2009. I saw. Neither effort suppressed drug prices, and healthcare stocks rebounded.

Democrats today are again determined to lower drug prices. They are pushing the bill through Congress to give Medicare and Medicaid more power to negotiate with pharmaceutical companies.

Two House committees are investigating a controversial decision by the US Food and Drug Administration to approve a new drug for Alzheimer’s disease. Aduhelm Results vary, but it costs $ 56,000 per patient per year.

Pricing issues have a significant impact on the stock prices of manufacturers who claim that high margins are needed because every drug that succeeds fails.

Despite this issue, there is much excitement for investors in the healthcare sector. Biotechnology mRNA coronavirus vaccine It’s happening in several areas.

Jennifer DoudnaWinner of the 2020 Nobel Prize for her genetic editing work and spoken at the recent FT Weekend Festival, is associated with two companies, Intellia and Caribou (coming soon). Her collaborator, Emmanuelle Charpentier, co-founded CRISPR Therapeutics.

Two weeks ago, Intellia Gene editing therapy For liver damage, TTR amyloidosis. This was the world’s first for technology, but without current products and current income, it would be nearly impossible to value a stock.

The market is excited about the outlook in this area for treating more common hereditary diseases such as sickle cell disease and hemophilia. Many major pharmaceutical companies have their own research programs (especially Roche).

However, gene editing does not always bring a wealth of rewards to big pharmaceuticals. The science behind it is not always exclusive. As with some vaccines currently in use, more companies may be able to develop competing and successful therapies. And consider that the discovery of a new drug may simply replace the old drug and therefore the existing source of income.

Line chart of the S & P 500 Pharmaceutical Index showing a surge in pharmaceutical companies

Another more established area is immunotherapy, where the body’s immune system is manipulated to provide effective treatment.One of the most successful drugs these days is Merck Keytruda.. It blocks proteins made by some cancers that turn off parts of the immune system that would otherwise attack them. It has revolutionized the treatment of skin cancer and some breast cancers. It’s not cheap. However, it has fewer side effects than chemotherapy or radiation therapy, which can reduce overall treatment costs.

And here is one of the key considerations for investors to look to the sector and detect bargains. See if your company is helping to reduce medical costs.

This does not have to be a high technology. My colleague Cormac Weldon, who specializes in US equities, runs Amedisys, a home care business that provides preoperative and postoperative physiotherapy care at home at a much lower cost than hospitals and outpatient clinics. I am.

Pandemics have accelerated the adoption of many trends, especially new technologies and work practices.One of the companies we held before Terra dockAllows telephone or video consultation with healthcare professionals in North America. Two years ago, the idea of ​​remote counseling seemed far from ideal. How will the times change?

Public health requires coordination of hospitals, surgery, pharmacies, and increasingly care facilities and social welfare services as a whole. Not only are we much more motivated to adopt technology for this, but we also have general practitioner and consultant appointments, prescription orders, and even staffing lotus (a very complex task in a hospital). There is a growing desire to support more common problems.

In the future, more hospital capacity may be needed while waiting for the vaccine to be launched. One of the previously owned strains that had a low rating was Stryker, which manufactures hospital beds (and total hip and knee replacements, which are expected to grow in demand as hospitals return to normal).

We’ve left the test to the end, which is the area we find most attractive. Liquid biopsy is a growing area. It provides healthcare professionals with the opportunity to diagnose disease more accurately and quickly from blood, saliva, and urine samples, eliminating the need for invasive surgery.

The two companies we have long held to benefit from Illumina And Thermo Fisher.. Both manufacture sophisticated equipment sufficient to identify different Covid variants.

Another provider that can do this is Oxford Nanopore in preparation. Come to the public market straight away. Indeed, that technology may be ahead of the technology of today’s major players.

There is no financial information to determine if it is of reasonable value.Illumina too Recently moved to acquisition The Holy Grail, the leader in cancer diagnosis. The fact that the deal is awaiting competition approval in the United States shows how large companies are expanding their capabilities in this area.

These scientific supplies companies look expensive, but they have strong top-line growth, fat margins, and many repeat businesses. We believe they bring solid benefits, but I admit they aren’t the 10 baggers some readers want.

Wise investors may find these in the early stages of biotechnology, where new discoveries and technologies are being developed, but choosing the right stock is a professional task and involves risks. Lots of it.

We hope that for wise growth investors who are ready to do research, health care still offers a variety of possibilities. This sector has struggled, but like us, it may be heading for a brighter future.

Simon Edelsten is co-manager of Mid Wynd International Investment Trust and Artemis Global Select Fund.

Healthcare shares can provide a tonic — but choose with care Source link Healthcare shares can provide a tonic — but choose with care



Source link