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Today we live in a world where immediacy is an expectation not a luxury. The world has transformed from a time where we had to take our disposable cameras into a shop to get them developed in order to see our holiday pictures, wait by the radio for our favourite song and actually go into a travel agents to book a holiday. The world continues to move with greater rapidity and our lifestyles have adjusted accordingly. Companies that have developed such products (that fuelled/support these adjustments) have flourished. You need only look at some of the biggest companies in the world, to see the point in case. If you have a smartphone you can take, edit and view your holiday pictures; stream, buy or watch your favourite song; research and book holidays across the world. These firms grew to become the largest companies in the world by delivering products that serviced this need for immediacy in our everyday lives: so what is the potential for companies that deliver technology solutions that can help offer immediacy in one of the most important aspects of our lives, our health? Immediacy in healthcare has the potential to save lives as early diagnoses of an illness or a rapid response to a critical situation can be the difference between life and death. Healthcare technology not only saves us time but also potentially extends our time. Time is our finite commodity, its value is priceless and as a result companies developing technology in this space have huge growth opportunities.

Where do we see these opportunities?

The sector is still heavily reliant on paper but technological advancements in healthcare are expected to transform the industry. Health technology companies are at the forefront of developments within the sector, which are already having a tangible impact, as the adoption of digital technology has resulted in lower costs, quicker diagnosis and targeted treatment. The overarching theme spans the entire sector offering our investment team the opportunity to invest in companies developing technology applications in every subsector.

Examples of the themes explored:

Healthcare IT

As the benefits of information technology (IT) continue to be felt within the healthcare industry it is widely accepted that IT spending will increase. IT investment within the USD 3.5tn US healthcare market is low, currently standing at just 1% of revenue spend vs the 3.3% all industries’ average. A knock on effect of this lack of spending is the extremely high administrative costs of 8% vs 1-3% in other sectors.¹ To put this into context, in 2016 the US spent 17.8% of GDP on healthcare, clearly highlighting how big the sector is and the need for increased efficiency. The further optimisation benefits that IT can deliver, in a sector that is clearly inefficient, should allow companies to be more competitive in their pricing and boost their overall client experience. This offers companies embracing IT a clear advantage, their competitors must follow suit or get left behind, for IT companies servicing the healthcare sector this presents a significant opportunity.

Remote health/medicine

Remote technologies to access healthcare services, consulting and/or diagnosis will be in increasing demand by patients and will help to increase capacity of cost-constrained healthcare systems. The UK’s National Health Service (NHS) is an excellent example of the issues facing modern healthcare systems and the benefits that remote technology can bring. When the NHS was formed in 1948 the life expectancy for men was 66, and for women it was 71. Life expectancy for the UK from 2015 to 2017 is 79.2 years for men and 82.9 years for women. During this time the population has also risen from 50m to 67m. Remote technology has been embraced as a method of relieving some of the increased stress the NHS is now under. Devices are provided for older patients and those recovering from surgery, that allow them to take particular readings at home at an agreed regularity, these devices then automatically send the results to consultants who will decide if any further action is needed. Successful implementation of this on a wider scale will further reduce costs, waiting times and free up funds for further investment.

Digital healthcare innovation

Before a trial begins, scientists explore new molecular pathways or cause-effect relationships for diseases or potential drug effects, which currently involve a lot of physical testing. Drug discovery research and development costs are going up and productivity is reducing as diseases become more complex. This process contrasts with other industries where there is computer aided development and numerous simulations before physical testing begin. New data availability and computational advancements mean that this could be about to change with what could be seen as Artificial Intelligence (AI) in the drug industry. First successes have been seen in this area, known as “rational drug design” (i.e. drug development via Computer-Aided Drug Design), where AI delivers similar results whilst cutting development times by one year. This could make the large chemical compound libraries, a currently important asset of drug companies, obsolete.

1) JAMA 2018

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