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Investing in Healthtech. Raising capital by changing the world for better.

Over $7.8 trillion is spent on healthcare globally. With the healthcare sector growing significantly faster than the overall global economy, this number will almost certainly be much bigger by the end of the decade. Healthtech, which was named the fastest growing healthcare sector, heads the rate of top 5 fastest-growing industries by venture capital investment’s volume with funding over USD 7.4 billion in 2019 [1] , leaving behind transportation, financial services, AI and E-Commerce.

There are plenty of investment opportunities in this field, R&D of medical equipment and drugs are among the most prospective. Many gadget manufacturers also follow this fast-developing stream, and its pace attracts investors, offering a variety of emerging trends.

  • Predictive medicine. Its overall aim is to flag risk factors so that physicians and patients can work together to reduce the chances of future problems to give people the best possible quality of life. For instance, molecular diagnosis can define various diseases in their first stages helping prevent their evolution and allows people to live longer. Besides, newborn screening, risk and preconception, testing opens grand opportunities making this field attractive for investors.

  • Artificial Intelligence (AI), AR and VR. In particular areas, AI can diagnose the disease faster and more accurately than a doctor, e.g. IBM Watson’s accuracy is 90%, when doctor’s is only 50% [2]. Augmented and Virtual Reality can also be used for conducting remote surgeries or consultations and mental health issues treatment. The trend is progressing, and industry forecasters predict that 25% of all investment in AR/VR is in healthcare and that by 2025, the healthcare market for AR/VR will be second only to gaming [3].  

  • Big Data and Blockchain. If used for medical records, it can place a patient at the center of the health system, thus increasing the security, privacy, and interoperability of health data making them available anytime. Big Data can help find a way to aggregate all data from health trackers such as smart watches as well as traditional devices like blood-pressure monitors and make it all anonymous but searchable, which provide medical researchers with a powerful tool for drug development and lifestyle studies.

  • Silver Economy and Population Ageing. Healthcare is getting more important as we all get older. There is a belief that we will live up to 100 years thanks to new innovations in treatment and technology. The world's senior population will double from 1 billion citizens at present to over 2 billion by 2050. The majority of them are expected to be solvent, thus creating new needs in many areas such as healthcare, insurance and funding solutions. 

These are just some of the innovations now transforming medicine at a remarkable pace.

Healthcare is considered a "defensive sector": when many industries are doing poorly due to negative economic conditions, the health industry can still perform relatively well because people still need to see a doctor and buy their medicines, regardless of economic conditions. Particularly this year’s pandemic showed us how useful Healthtech innovations can be during crises, literally saving people’s lives. For instance, robots were deployed for disinfection in hospitals, medicine and food delivery, vital signs monitoring, thus helping significantly to reduce the infection risk of all personnel.

Even though investment in healthcare is an important contribution to economic progress, as healthy populations live longer and are more productive, it also brings big social benefits by enhancing the quality of life. The positive aspect of such type of investment is also the assistance of most state governments. For instance, six health projects across the UK, using technologies to detect chronic and terminal illnesses, will be given GBP 13M in funding by the government by the end of 2020 [4]. Other developed countries are also interested in supporting the health of their population hence maintaining the investment background in this sector. 

The healthcare sector is vast, and there are many large and small companies to choose from in various industries. But it is important to remember that despite the attractive correlation between the pandemic crisis and pharma or healthcare returns, investing in this sector carries significant risks.

Advice from a professional asset manager can reduce the volatility of investing in stocks by diversifying holdings in the portfolio. One of the examples could be BAO Vitta Global Equity Fund, which has been engineered to preserve capital and ensure high quality growth by investing in global equities in the long term. Apart from Healthtech, portfolio companies support such global themes as Digitization, AI, Big Data and Cloud Services. In the customised solution designed by BAO team, the portfolio companies possess unique value propositions and a prominent market position ensuring their resilience in times of global transformation.    

To sum up, healthcare is a large sector that goes far beyond hospitals and pharma companies and despite all the risks, can provide a significant opportunity for investors to generate strong long-term returns. Moreover, investing in companies that are dedicated to changing the outlook for patients is one way of giving back to society.

July 20th 2020



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