RAP media thread., page-1530

Interesting article in the Australian financial review this week.
Remember how AstraZeneca was reacting to ResApp posts on LinkedIn prior to that announcement, so does multiple people from ResMed, Commercial Project Manager ect

How global healthcare disruption can make you money
With a technology-led revolution in medicine fast approaching, investors need to be ready – for themselves and their portfolio's health.

Tony FeatherstoneContributor
Oct 17, 2020 – 12.00am
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COVID-19 is providing a shot of adrenalin for healthcare investing as technology hastens change across the sector and re-imagines medicine's future.

Fund managers believe this year's telehealth boom will spark sweeping digitisation across healthcare. And that technology will disrupt everything from drug discovery to patient care.

Telehealth has become a global phenomenon. Virtual-care consultations will top 1 billion globally by December, predicts Forrester Research.


Often investors get healthcare exposure through global equity funds rather than thematic funds. Simon Letch

Australia had 17.2 million telehealth visits in second-quarter 2020, notes Microsoft Australia. That's 21 times more visits in three months than in the past nine years combined.

McKinsey predicts up to $US250 billion ($348 billion) of healthcare spending in the United States could be "virtualised" as consumers embrace telehealth, and its use extends to more treatments.

Telehealth is just part of the coming healthcare revolution. Virtual hospitals will use technology to monitor more patients and e-pharmacies, hotly debated in parts of Europe, could dispense drugs online and courier them to homes.

Big data and artificial intelligence (AI) will help detect illness, provide back-up diagnoses, “triage” patients online and spawn a new market in consumer medical devices.

Then there are surgical robotics, "nanobots" that aid drug delivery, virtual reality that trains healthcare workers and treats anxiety, and 3D printing used in surgical planning.

Even those changes are small compared to technology's effect on biotech. Gene editing and synthetic DNA manufacturing will transform aspects of drug discovery and delivery.




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Of course, the full effect of these changes is years away, and some are far from certain given regulatory and privacy challenges – and the power of incumbent healthcare operators to resist change. But long-term investors need to position for healthcare disruption.


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"Incredible change in healthcare is creating compelling stock opportunities," says Thomas Rice, portfolio manager of the top-performing Perpetual Global Innovation Share Fund.

"There's huge scope for innovators to make a difference in our lives. There's so much inefficiency in drug discovery and the delivery of healthcare services."

If Rice is correct, investors should increase their exposure to healthcare stocks.


Thomas Rice of Perpetual. Rhett Wyman

Perpetual's innovation fund owns Nvidia. a US provider of AI in healthcare and drug discovery, and Twist Bioscience, a low-cost provider of synthetic DNA.

Its other offshore holdings include Guardant Health, which is involved in liquid biopsies; Illumina, a supplier of gene sequencers; Schrodinger, a life-sciences software star; and German biotech giant Merck.

Rice believes investors should use innovation funds rather than specialist healthcare managed funds for sector exposure, as technology blurs industry boundaries.

"Healthcare-focused funds are likely to miss opportunities such as Nvidia and other tech providers that are enabling and benefiting from the melding of healthcare and computing."




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Cross-sector participation in healthcare is increasing. Amazon, Alphabet (Google), Apple, Microsoft and other tech gorillas are investing more in the sector and driving change.

Apple is collecting oceans of data through devices with advanced health-monitoring technology. Google's search engine and algorithms are powering AI involved in early detection and prevention of disease. And Amazon is providing digital infrastructure for a healthcare revolution through its cloud-computing services.

Google in November 2019 acquired Fitbit for $US2.1 billion. Google now has data on every heartbeat and sleep pattern of tens of millions of people worldwide through Fitbit fitness-tracking bands and watches.

Cross-sector partnerships also feature. Verily, a division of Alphabet, in 2018 formed a joint venture with Australian healthcare star ResMed. They are using technology to identify people with undiagnosed and untreated sleep apnoea.

New directions
This blurring of technology and healthcare is taking medical-device companies in new directions. ResMed could transform into a global health-solutions company that uses data to identify a range of medical conditions during sleep. ResMed is further down this technology-led reinvention than any Australian healthcare company.


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Cochlear could also have a different future. Some investors see Cochlear not as a maker of hearing technology but as a global leader in safe implantation of devices in the skull. Such devices might in the future capture healthcare data, treat other conditions or even, in an extreme example, merge human and machine-learning capabilities in brains.

Whatever happens, Australian investors should identify the best way to achieve healthcare exposure and when to buy.

The timing is right. Healthcare has underperformed other tech sectors during the pandemic. The S&P 1200 Global Healthcare Sector Index has returned 12.3 per cent over one year to end-September. The Nasdaq 100 index returned 39.6 per cent.




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Long-term investors could rotate some funds out of soaring technology stocks into a lagging global healthcare sector.

Hard to access
However, healthcare investing is hard work. A handful of exceptional local companies – notably CSL, Cochlear and ResMed – dominate Australia's listed healthcare sector. Most analysts consider these stocks fully priced, judging by consensus share-price targets.

The ASX has a "long tail" of promising healthcare and biotech stocks, but many are too small or speculative for conservative investors.

Also, few Australian managed funds specialise in healthcare. Often investors get healthcare exposure through global equity funds rather than thematic funds.

Platinum Asset Management has the well-regarded Platinum International Health Care Fund, one of the few local active managed funds in the sector.

iShares and BetaShares have exchange traded funds (ETFs) over global healthcare indices. VanEck recently launched a new smart-beta healthcare ETF that combines aspects of active and index investing.


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Innovation funds from Perpetual, Loftus Peak and Holon Global Investments are other options, although they invest well beyond healthcare. Holon is bullish on healthcare disruption in China and will next year launch a fund focused on this theme.

This lack of stock and fund choice means many Australian investors are "underweight" healthcare at a time when there has never been more opportunity.





Alex Vynokur, chief executive of Betashares. Dominic Lorrimer

BetaShares CEO Alex Vynokur believes 5-10 per cent of a balanced equities portfolio should be allocated to global healthcare stocks, depending on the investor.

"In the past, investors saw healthcare as purely a defensive investment," says Vynokur. "Today healthcare is much more about defence and growth as big players buy start-ups and use technology to disrupt drug discovery, and healthcare products and services."

Different stages
MST Marquee's Andrew Goodsall, Australia's top-rated healthcare equities analyst, says three trends will transform the healthcare sector: telehealth; integration; and big data.

"The immediate challenge is digitising more healthcare services and producing standardised data. That will take a long time, and there are many regulatory and privacy issues. Telehealth is the first stage of this revolution. It's happening much faster than anybody expected."

Surveys suggest many Australians like telehealth, fast-tracked pathology results, home-delivery of medicines and electronic healthcare messaging.

Goodsall says telehealth will change economics across the health sector. "The option of a telehealth appointment improves access to medical advice, particularly on weekends where the alternative is a hospital emergency ward."

The federal government in September announced it would invest more than $2 billion to extend Medicare-subsidised telehealth, pathology and other services for another six months. The government appears keen on a permanent change in telehealth, particularly in regional areas that have shortages of medical practitioners, says Goodsall.

However, telehealth predictions need context. Most visits are still by phone. Video consultations with doctors are, anecdotally, little more than Zoom calls. Many patients will return to face-to-face visits after the pandemic, by choice or because their condition requires it.




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Goodsall says telehealth innovations will in time enable greater integration of healthcare services. "The potential is patients monitoring their health at home and relaying and discussing the data in real time with their doctor during their telehealth appointment."

That will open up a vast market in at-home testing devices as patients monitor blood pressure, breathing and other issues. Using technology, they will self-triage basic ailments, confirm with their clinician via telehealth, and leave in-person care for those who need it most.

Stage two is telehealth enabling the patient's "care team" to collaborate online, says Goodsall. "Everybody who interacts with the patient – from a general practitioner to specialist, nurse or other service providers – could securely share patient insights. Better healthcare integration would reduce much duplication and improve patient care."

Goodsall adds: "Healthcare is one of the few industries that still use fax machines and records information by pen and paper. There's great potential to reduce inefficiencies and boost productivity and profits through digitisation."

Stage three of healthcare disruption is big data and AI, says Goodsall. "Over time, a central data repository for patient data will be created, assuming safeguarding of patient privacy. Wearable devices will capture real-time health data and algorithms will analyse it for early detection and prevention of illnesses, or as a back up to a human doctor's assessment."

Goodsall says AI will enhance the quantity and quality of diagnoses involving medical imaging and other tests. "Instead of a human specialist manually reviewing a CT (computerised tomography) scan, AI can already achieve high levels of accuracy. When used as a decision-assist tool, the outcome (from an AI diagnosis) can approach 100 per cent."


Holon Global Investments co-founder Heath Behncke.

Holon Global Investments co-founder Heath Behncke believes digital health will help developing nations narrow the healthcare gap with Western countries. "China's population is ageing rapidly because of its one-child policy. China knows it won't have anywhere near enough doctors or nurses to treat a population that will seek far more healthcare services in the coming years."

Behncke believes developing nations could race towards digital infrastructures such as e-hospitals, e-pharmacies and AI that provides the first layer of healthcare screening.

Just as India moved to mobile phones rather than build costly fixed-line telecommunications infrastructure, so too could developing nations create digital healthcare infrastructure rather than replicate Western healthcare systems that are groaning under an ageing population.




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"COVID-19 is forcing the global healthcare system to shift at an accelerated pace," says Behncke. "We believe healthcare, education and financial services will be the winners from COVID-19. And that the big healthcare action will be in developing countries in Asia."

Key trends
One of Australia's most-experienced healthcare investors, Bianca Ogden of Platinum Asset Management, believes technology will quicken drug discovery and reduce its risk through more precise targeting of cells and genes.

Ogden is bullish on gene therapy, a technique that uses genes to prevent or treat disease. She says CRISPR, a form of gene-editing technology that lets scientists cut and paste genes into a patient's DNA, has great promise.


Bianca Ogden of Platinum Asset: "Synthetic biology, in its infancy, has implications for many industries." Louie Douvis

"The beauty about CRISPR is its elegance and how easy it is to do," Ogden says. "It is a natural process that bacteria use to fend off viral infections. In science, these types of natural tools are the best tools. Today, CRISPR is used in most molecular labs as the molecular 'scissor'."

Emmanuelle Charpentier and Jennifer Doudnarecently received this year's Nobel Prize in Chemistry for their work on CRISPR-Cas9. This ground-breaking method changes with high precision the DNA of animals, plants and other micro-organisms.

"The CRISPR/Cas system is what is so exciting about biotech investing," says Ogden. "It has revolutionised gene editing, which had been around for a long time but was not easy to do."


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Ogden also favours synthetic DNA, which applies engineering principles to biology, to redesign and fabricate biological components and systems that are not present in the natural world. "Making long pieces of DNA from scratch is a different theme that can fuel the next manufacturing revolution," she says. "Synthetic biology, in its infancy, has implications for many industries."

Gene editing and synthetic DNA seem a long way from telehealth appointments over the phone. Also, healthcare, especially biotechnology, can be prone to investment hype. Buying too early into a megatrend, even one as pronounced as healthcare disruption, can destroy wealth.

But make no mistake: a technology-led revolution in medicine is fast approaching. Investors need to be ready – for themselves and their portfolio's health