#Market Strategy — 06.01.2020

Innovations In Health Care


Technology Multiplies Discoveries And New Applications

Theme d'investissement 10 | BNP PARIBAS WEALTH MANAGEMENT

The health care sector is outpacing the rest of the economy. On the back of growth of the Internet, means of communication, Big Data, data storage, and Artificial Intelligence, health care is progressing considerably at every level.

There are new powerful methods of research and development, new (types of) treatments, tools and services. Therapies and health care centres are being managed more efficiently thanks to large amounts of quality data available and a better exploitation of the latter.


This theme is aimed at dynamic investors who are willing to take some risk, because innovation does not always produce the expected benefits.

The most dynamic companies in this area or the fastest-growing ones—are often small- and medium-sized enterprises (SMEs). However, the risk is often higher because these companies are less mature, less diversified and have fewer resources than large companies operating in this innovative industry.

Therefore, parallel to investing in stocks of a handful of leading companies, in riskier sub-segments, we like investing in diversified funds, which are managed by highly-specialised professionals.

A long-term investment horizon is recommended for this relatively risky industry. 

On the back of growth of the Internet, means of communication, Big Data, data storage and Artificial Intelligence, the whole health care industry is changing considerably at every level.


Research and Development

Genome-sequencing costs have fallen sharply in recent years thanks to more powerful computers and chips. This phenomenon has led to the development of new research and treatments through genome analysis. Moreover, significant progress has been made in designing and developing:

•Medical equipment/devices and ancillary activities, such as the huge field of medical imaging

•Laboratories (which have some automation)




Medical treatments and equipment

A revolution is taking place in treatment methods. Surgeons are being assisted by robots providing improved images and visibility, a higher resolution and focus, more stability during operations (for instance, reduced hand trembling), more flexibility and  convenience for operating (e.g. remotely).

The patient should receive better treatment and recuperate more quickly, with fewer complications during and after the operation. Furthermore, progress is being made in:

Biotechnology:  Sector players are maturing and some are very profitable.  For example, new therapies related to genome analysis are booming.

Promising research is CAR-T (Chimeric Antigen Receptor) therapy, which consists of repairing or replacing damaged cells and stimulating the implanted healthy cells (via immunotherapy). There are a host of outlets in oncology or in the treatment of rare diseases.

Personalised treatment: thanks to a large amount of data on a patient.

In addition to robots, there is an emergence of new generations of implants, (more sophisticated) bionic products manufactured, with advanced materials, which the human body can cope with much better.

Other increasingly sophisticated devices help to detect pathologies (heart disease, diabetes) more rapidly.


More efficient health care centres

The explosion of data, the Internet of Things, the Cloud and new means of communication have led to greater efficiency and better exchanges

•At hospitals and clinics, digital data are less likely to get lost (X-rays and other heavy files can be sent easily). Nowadays thousands of data on a patient can be stored electronically.

•More accurate and detailed data analysis.

•Some diagnoses can be made remotely via video or online. Doctors and businesses specialise in this sub-sector.

•It is really important that data on patients are protected and their privacy respected. Again there are specialised companies in this area.


Although the health care sector is structurally one of the most profitable, it also carries risks:

News flow around the forthcoming US election is causing volatility. Left-wing candidates, for example, want to make public certain privately-run services. Their aim is to make drastic cost savings for the patient. This should squeeze sales and profits of industry players.

In the meantime, the American President and Congress are working on lowering health care costs. Established companies are more at risk given their product portfolio (which is older on average) and the will of regulators to foster innovation.

Costs and failure rates are high in the initial stages of research. Despite some great success stories, many start-ups are forced to close down rapidly.  

Graphique - Thème 10