From digital and physical infrastructure to the importance of prevention, the pandemic has highlighted the strengths, weaknesses and investment opportunities in health.
Written by
The Thematic Advisory Board
Share this article
The Covid-19 pandemic exposed the strengths – and the weaknesses – of health systems around the world. The Pictet-Health Thematic Advisory Board has identified five lessons that the industry can learn from the experience, which open up new opportunities for both businesses and investors.
1.Embrace the benefits of digital
In the first few months of the pandemic, tele-health appointments surged to 78 times their pre-Covid levels, accounting for almost a third of outpatient visits.1Although in-person visits have resumed with the lifting of restrictions, digital appointments are still around 38 times more prevalent than before the pandemic, suggesting that tele-medicine is very much here to stay.
Remote psychiatry is experiencing especially strong growth, with around half of all consultations now digital.2 Advisory Board members also highlighted the value and convenience of tele-health for follow-up appointments and reviews of test results.
According to consultancy McKinsey, in the US alone, as much as USD250 billion of current healthcare spending could be shifted to virtual or near virtual care. The advantages include the possibility of getting closer to the patient, particularly in areas where traditional health provision is lacking, as well as significant cost savings and even benefits to the environment due to the reduced need for journeys. (In the UK, for example, NHS estimates that use of its app services has eliminated 22,000 car journeys each month.3)
However, for tele-health to maximise its growth potential, significant investment in digital infrastructure is necessary.
Beyond tele-health, the pandemic also highlighted the importance of machine learning and AI in tackling health problems. After all, it was data scientists– rather than epidemiologists – who were responsible for crunching data from 2.5 million app users to identify the loss of your sense of smell and taste as key Covid symptoms.
By centralising and unifying health records, there is the potential to better monitor and anticipate problems, both at the level of individual patients and whole regions where extra resources may be needed.
As well as playing a key part in diagnostics, Advisory Board members expect that data will be key to future drug development and clinical trial design. However, barriers to entry are high. Companies with scale and therefore access to large datasets (such as claims data for big insurance providers) are at an advantage. Many of the new digital health companies that have recently listed via initial public offerings still need to prove that their business models can reach that scale and turn a profit.
2. Prevention can be better than cure
With Covid proving particularly problematic for people with underlying health conditions (known as comorbidities), society has become more attuned to the need to embrace healthier lifestyles.
A more balanced, less highly-processed diet, doing more exercise, spending time in less polluted environments and reconnecting with nature are becoming more popular among both young and old.
All of which means the health industry should see growth in demand for healthy foods, personal care and hygiene, and services linked to healthy lifestyles.
Fig. 1 - Bed time
Intensive care beds per 100,000 population, selected countries
Source: Our World In Data, Phua et al. (2020); Rhodes et al. (2012). Data for 2020 where available; latest available year if not.
3. Don’t underestimate need for hospitals and nurses
The pandemic also brought into sharp relief the importance of having enough physical resources – be that doctors, nurses or intensive care beds. It highlighted great disparities in capacity, even within the developed world.
While Germany averages 48 intensive care unit (ICU) beds per 100,000 population, the US has 14 and Japan has fewer than five (see Fig. 1). There are similar disparities in numbers of doctors and nurses too. Within, Europe, for example, Norway scores relatively high on both counts, while Portugal has some of the lowest numbers, according to data from the European Observatory on Health Systems and Policies.
In the first wave of the pandemic, countries with more extensive hospital provision – such as Austria and Germany – performed much better, Advisory Board members noted. Could the pandemic spell the end of the trend of downsizing hospitals – and even lead to the construction of new ones?
Of course, hospitals need staff, and that is another major problem. Nursing is seen increasingly as an unattractive job, offering low pay and low social recognition. This needs to change. In the US, around a third of nurses are planning to leave their posts in direct patient care; in Europe similar trends are at play. Well-funded community care provision could help fill some of the gaps.
Data can help here, too. If data analysis predicts that there will be fewer nurses, that gives you the opportunity to better prepare and address the problem.
4.Private and public must work together
Another key lesson was that health clearly needs more investment – politicians have realised that without a functioning health system a country cannot have a functioning economy. Yet, there is a limit to how much of that money can come from the public purse, particularly as government debt levels are already elevated and as economic growth is slowing. Indeed, research by Advisory Board members shows that historically government health spending has tended to decrease after a crisis.
Fortunately, the pandemic provided a template of how businesses, governments and academics can work together towards a common goal – particularly in the development of vaccines. However, it also exposed some potential problems and shortcomings, as highlighted by the scandals over unsuitable personal protective equipment (PPE) and an ineffective “track and trace” system in the UK.
5.Supply chains are crucial
Supply chains are a major challenge for the health industry. The Covid-related interruptions to global trade highlighted the problem, and the current surge in inflation has only served to underscore the importance of stock levels and supply chains.
Even med-tech is not immune to supply issues, as illustrated by recent problems in the procurement of semiconductors, which are essential components of connected devices and implants.
A major re-think is due and is already underway. Firms across the health industry are looking to increased the flexibility and responsiveness of their supply chains – which can often be achieved by harnessing high quality data and using new technologies. As part of this effort, many companies are also broadening the range of suppliers they use and, in some cases switching manufacturing plants to home soil (onshoring) or to countries nearby (near-shoring), both of which reduce reliance on lengthy supply chains.
Finally, the pandemic highlighted the need to adopt an integrated approach to health (the “One Health” concept) beyond human health due to its inter-dependencies with animal and ecosystem health. This may help decrease the incidence of future zoonotic events, as well as improving the quality of the food we eat and the air we breathe.
Each thematic strategy benefits from a dedicated advisory board made up of eminent scientists, business leaders and academics. This enables us to test our views against experts in their respective fields, providing us with a deeper understanding of the regulatory environment and the trends supporting the theme.
Share this article
Important legal information
This marketing material is issued by Pictet Asset Management (Europe) S.A.. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The latest version of the fund‘s prospectus, Pre-Contractual Template (PCT) when applicable, Key Information Document (KID), annual and semi-annual reports must be read before investing. They are available free of charge in English on www.assetmanagement.pictet or in paper copy at Pictet Asset Management (Europe) S.A., 6B, rue du Fort Niedergruenewald, L-2226 Luxembourg, or at the office of the fund local agent, distributor or centralizing agent if any.
The KID is also available in the local language of each country where the compartment is registered. The prospectus, the PCT when applicable, and the annual and semi-annual reports may also be available in other languages, please refer to the website for other available languages. Only the latest version of these documents may be relied upon as the basis for investment decisions.
The summary of investor rights (in English and in the different languages of our website) is available here and at www.assetmanagement.pictet under the heading "Resources", at the bottom of the page.
The list of countries where the fund is registered can be obtained at all times from Pictet Asset Management (Europe) S.A., which may decide to terminate the arrangements made for the marketing of the fund or compartments of the fund in any given country.
The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments or services.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. The management company has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested.
The investment guidelines are internal guidelines which are subject to change at any time and without any notice within the limits of the fund's prospectus.
The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a specific security is not a recommendation to buy or sell that security. Effective allocations are subject to change and may have changed since the date of the marketing material.
Past performance is not a guarantee or a reliable indicator of future performance. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares.
Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on assetmanagement.pictet in the “Resources” section of the footer.
This document is a marketing communication issued by Pictet Asset Management and is not in scope for any MiFID II/MiFIR requirements specifically related to investment research. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any products or services offered or distributed by Pictet Asset Management.
Pictet AM has not acquired any rights or license to reproduce the trademarks, logos or images set out in this document except that it holds the rights to use any entity of the Pictet group trademarks. For illustrative purposes only.
Cookie Policy
This website uses cookies to enhance user navigation and to collect statistical data. To refuse the use of cookies, change your settings or for more information, please click on the following link: Cookies policy. By continuing to browse this website, you accept the use of cookies for the above purposes.
