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The pandemic has cast a spotlight on the healthcare industry’s ability to respond to the challenge of not only delivering a vaccine, but also the wider value chain from diagnostics, manufacturing and distribution.

Disruption and innovation in the healthcare sector

Ketan Patel Ketan Patel Fund Manager
Opinion

Disruption and innovation in the healthcare sector

Ketan Patel

Ketan Patel
Fund Manager

The pandemic has cast a spotlight on the healthcare industry’s ability to respond to the challenge of not only delivering a vaccine, but also the wider value chain from diagnostics, manufacturing and distribution. The industry has an excellent track record in leveraging technology to deliver new treatments in recent decades in traditionally difficult therapeutic areas including oncology and auto immune diseases. In addition, huge strides have been in diagnostics and medical technology where patients have benefitted immensely via early diagnosis and better targeted treatments.

Disruption

The pandemic has been a catalyst for telehealth services which have come to the forefront during the lockdown with virtual interactions becoming the norm across a wide range of conditions, including diabetes and hypertension. This ensuing disruption could lead to long term changes in how patients consume and interact with their healthcare providers, more so with the ever increasing pressure to lower treatment costs.

Beyond telehealth, the digital disruption in distribution and new entrants into the healthcare market place are gathering pace. The traditional bricks and mortar based pharmacy model will come under increasing pressure from online disruptors similar to what has happened to the high street retail model. In the US, the ecommerce giants are in the early stages of developing an alternative online model to challenge the status quo and this will disrupt the traditional relationship between healthcare plan sponsors, intermediaries and consumers.

Innovation

The healthcare industry has excelled on the innovation front and this has very much been driven by the early adoption of technology, especially in research and development (R&D). This has been built on the back of the sequencing of the human genome which has spurred the development of personalised medicine. The use of artificial intelligence (AI) and big data has led to a revolution in R&D programmes for pharmaceutical companies of all sizes. This may well signal a changing of the guard with larger companies becoming more focused on the development and distribution of treatments and leaving the early stage research to smaller enterprises.

The industry has an excellent track record in leveraging technology to deliver new treatments in recent decades in traditionally difficult therapeutic areas including oncology and auto immune diseases. 

The pandemic could lead to a watershed moment in how chronic disease treatments are researched in the future with more public-private partnerships being used by governments, which are under constant budgetary pressures to deliver low cost healthcare services. Technology, especially big data and AI, will play a pivotal role in how the various stakeholders interact and communicate at the various stages of drug development. This has extended to the regulatory environment which has had to become more flexible during the pandemic, with technology continuing to be an enabler. The wider supply chain in healthcare will also be keen to innovate to ensure that there is minimal disruption in the distribution of medical treatments.

Technology: Long-term tailwinds

The healthcare industry has been an early adopter of technology across all of its diverse sectors and this has rewarded long-term investors. Long-term tailwinds include an aging and ailing global population which is growing rapidly and supported by a burgeoning middle class in developing markets. The healthcare industry remains an early adopter of technology, especially big data and AI and this augurs well for both patients and healthcare providers. Health and Wellbeing remains a strong theme for our Amity fund range and we continue to find exciting opportunities to invest in whilst being highly cognisant of the challenges of becoming shareholders in businesses that are at the forefront of the next ‘age of medicine’.