Giant leaps forward in medicine are setting off a technology surge that will revolutionise the market for investors.
Although the claim may be bitter pill to swallow after healthcare and pharmaceuticals have underperformed for years, a healthcare fund manager argues that the sector is making an excellent recovery.
John Bowler, who manages the Schroder global healthcare fund, feels advances in treating cancer and heart disease are opening new opportunities.
In the past, failed products and drop offs in sales when patents expired put off investors.
One of the underlying changes that have brought new life to the sector is work on the human genome that has led to new technology to aid even more research into genetics.
As the costs of research decreases as improved tools to analyse proteins and genes are developed, doctors are uncovering better and more effective drug treatments.
Diagnosing the market
Coupled with better management of drug and medical technology companies who are more focussed on shareholder returns, Bowler believes the time has come to reassess the market.
“Healthcare returns a regular income, but the important point is investors need to look at how much more doctors know about diseases and how this knowledge helps them offer more effective treatments,” said Bowler.
“For healthcare watchers, the role of drugs companies has changed. Instead of concentrating on copying successful treatments, more new drugs are innovative and improved treatments. The future looks genuinely exciting, and investors should heed the diagnosis.”
International figures reveal heart disease and cancer are the biggest causes of death, but despite the cost of research adding up to billions, only small advances in treatment have been made in hundreds of years.
However, research on the human genome is showing some tremendous advances and a shift in emphasis to manipulating the body’s immune system to counter disease, rather than surgery or treating symptoms.
Breast cancer drugs
“This is an idea that has been kicked around for a while, but while scientists have failed to make any real progress in the past, work on the genome is increasing understanding about why cells mutate and turn into cancer,” said Bowler.
“New treatments are on the horizon and investors could see new products driving sales and share prices up.”
For example, the National Health Service in Britain is making a five-year course of tamoxifen available to all women with a high risk of breast cancer, which will boost sales and growth for the makers
Meanwhile Roche’s Herceptin is prescribed to a quarter of breast cancer patients and has clocked up $6 billion in sales.
Adding in treatments for other cancers will have a massive effect on pharmaceutical company bottom lines and deliver value and growth for shareholders, claims Bowler.
