DIY Investor Magazine
|
June 2017
23
Advances in information technology, especially data
analytics, are beginning to help governments and health
insurers predict the healthcare needs of a population
and to measure the value of a product or a service.
Healthcare is likely to remain high on the political
agenda and that governments will continue to look to
the healthcare industry for new technologies and modes
of delivery that can improve the efficiency of healthcare
systems.
The need to improve efficiency is already beginning
to have consequences for companies operating in the
healthcare sector driven by the principal entities that
pay for healthcare – governments and insurers.
The move to value-based reimbursement is a significant
change to the way that healthcare will be delivered
and managed. Companies that do not adjust to these
changes, and are not seen as part of a solution to the
problem, are likely to face pricing pressure and lose
significant market share. Conversely, companies that
adapt to change and take advantage of the new market
opportunities should gain market share and grow.
Importantly, structural change is set to affect all
healthcare companies providing both products – drugs
and devices – and healthcare services and so the focus
on pharmaceutical companies no longer seems an
appropriate investment strategy.
With any major structural change there are risks and
opportunities – especially for the incumbents. Large
companies need to embrace the digital transformation
of healthcare so that they can benefit from the long-
term demographic changes and so deliver steady and
reliable free cash flow growth.
There is a new trend for healthcare companies to use
consolidation as a route to improving efficiency. In
this way, companies can create economies of scale,
broaden product portfolios, standardise products and
processes, lower cost of goods, take market share
and, most importantly, deliver cheaper solutions to their
customers.
We are also excited by the emergence of digital health
– an all-encompassing term that covers a broad array of
products and services arising from the convergence of
information technology with healthcare. Moreover, digital
health could make the concept of patient-centric care
a reality and give individuals access to cutting-edge
medical technology that could help them in their home
and daily life to monitor and prevent disease.
All these factors lead to exciting opportunities for
investors and is why we are recommending proposals
to change the Polar Capital Global Healthcare Growth
and Income Trust. These proposed changes are
seeking to extend its life to March 2025; see a change
to the investment mandate to focus on growth, while
continuing to pay a modest bi-annual dividend.
These proposed changes are being implemented by
the Polar Capital Healthcare Team, a team of six highly
experienced individuals, with the ability to ask the
experts the right questions, leading to the right answers
in terms of investment decisions. The team undertakes
high levels of due diligence with doctors, clinical
experts and scientists and meet the management of
companies, giving a real competitive advantage. All of
the investment ideas are generated internally among the
team, which has over 100 years of combined investment
experience.
Strength and depth aside, the Polar Capital Healthcare
Team have been very early to recognise and react to
structural changes going on in the healthcare industry.
And those structural changes have and we believe
will continue to offer some interesting investment
opportunities. The industry is incredibly fast moving
and experience is what is critical in terms of prioritising
information and then using it to make investment
decisions.
Subject to shareholder approval, the reconstructed Polar
Capital Global Healthcare Trust will commence trading
on the London Stock Exchange on 20
th
June 2017.
Further details are available at
