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How global healthcare disruption can make you money – Holon Global Investments featured in the AFR

Published 19 Oct 2020

Heath Behncke, our Managing Director and Portfolio Manager was featured by Tony FeatherstoneThe Australian Financial Review in the article “How global heathcare disruption can make you money”, 17th October, 2020.  Below is an extract from the feature, the full article can be accessed here.

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.

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.

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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Ways to access global healthcare trend

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.

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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.

“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.”

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