KPB highlights brighter opportunity for the healthcare industry
KBank Private Banking (KPB) holds the view that opportunity is abounding for investment in the healthcare industry with good performance despite soaring inflation. In a seminar titled “Healthcare: As Important as Ever”,KPB recommends K-GHEALTH – an equity fund that focuses on long-term investment in thriving healthcare innovations in order to cash in on the prevailing health-conscious trend worldwide. Dr. Manop Pithukpakorn, Professor of Medicine and Head of Medical Genetics Division, Department of Medicine, Faculty of Medicine Siriraj Hospital, one of the keynote speakers in this seminar, claimed that COVID-19 has raised awareness of the importance of healthcare technology which can help improve people’s health and wellness, noting that eight innovations will emerge as future trends. Also present in the event was an investment specialist from JP Morgan Asset Management International Equity Group, who viewed that healthcare stocks would still offer positive returns to investors despite rising inflation, though ‘selective’ stocks.
Ms. Siriporn Suwannakarn, Senior Managing Director – Financial Advisory Head, Private Banking Group, KASIKORNBANK (KBank), noted that during the past 2-3 years when the world was crippled by COVID-19, we have learned that good health is central to our happiness.Proven healthcare innovations and advanced medicine can extend our lifespan thanks to improved quality of life.KBank Private Banking sees brighter opportunity in investment in healthcare, and thus recommends K-GHEALTH as a long-term investment vehicle, especially amid a volatile market environment.
K–GHEALTH focuses on medical and healthcare stocks in four key themes as follows:
Pharma – Focus is on precision medicine and greater convenience in use. For instance, a drug capsule has been developed for the oral delivery of insulin
Biotech – Biotechnology has been used for enhanced effectiveness in diagnosis and treatment at the genetic level. Notable initiatives include treatment of cancer and cardiovascular disease, and development of medication for heart failure prevention through nourishment of heart muscle to bolster its strength – which is a way to tackle the problem at its root cause.
Medical Tech – This involves the use of surgical robotics, and the adoption of AI for digital data processing to ensure speediness and timeliness in diagnosis and treatment.
Healthcare Services – This allows people to gain improved access to public health services at more affordable prices, especially via a health insurance system with a broad network.
Dr. Manop Pithukpakorn, Professor of Medicine and Head of Medical Genetics Division, Department of Medicine, Faculty of Medicine Siriraj Hospital, observed that the COVID-19 pandemic had shown that advanced medical technologies and healthcare were a great help in our battle with the disease, from the stage of diagnosis, and in our attempts in treatment and prevention, as well as enhancing efficiency throughout the entire supply chain of our healthcare system. The COVID-19 outbreak has also advanced our usage of medical technologies, the importance of which will be acknowledged by the public from now on. As pointed out by Dr. Manop, eight medical innovations are expected to be the trends of our future, namely:
Telemedicine: Development of telemedicine platforms has been pushed forward by the COVID-19 situation, so that patients are not required to come and see their physicians at hospitals, and their data can be sent to their physicians via smart watches so treatments are issued on these platforms. In 2020, total market value of telemedicine amounted to USD790 billion or THB27 trillion, and it is expected to reach USD3.96 trillion or THB135 trillion in 2027.
AI, Machine Learning and Big Data: As medical data has become more digitalized, AI can be used for more efficient diagnosis, screening, and decision-making of physicians. For example, AI can shorten the diagnosis time for ischemic strokes from 15-30 minutes to merely 3 minutes.
Internet of ‘Medical’ Things – AR / VR and sensors: Medical wearable and connected devices have been developed for healthcare purposes, such as AR / VR for patient surveillance and onsite treatment without patients’ hospital visits, sensors inserted on patients’ arms to check blood sugar throughout 24 hours, or sensors on the pills to check whether or not patients take their medicine in a timely manner. In 2020, 30 percent of the IoT market was seized by healthcare products, which will likely increase to USD6.2 trillion or THB211 trillion in 2025.
Medical Automation and Robotics: Operations of small-sized organs by robots that require high precision, for example, hands, ears, eyes or brains, and other usages of robots will have fewer errors and be less time-consuming. In 2026, the market value of this field may total USD400 billion or THB13.6 trillion.
3D Bio-Printing: The application of 3D Printing technology for printing of bone structure is aimed at enhancing growth of bone cells into real bones. Meanwhile, this technology can also be applied in organ transplant. Its market value will likely reach USD1.8 billion or THB62 billion in 2027.
Gene Editing: For certain incurable diseases, gene editing could be made through the CRISPR technology to correct patients’ defects. Among others, patients with high hyperlipidemia cannot be cured by the medicine available at present, but could be treated by the CRISPR system that will correct their genetic defects and reduce their cholesterol levels. In 2026, the market value of this technology could amount to USD400 billion or THB13.6 trillion.
Predictive and preventive medicine: Since the understanding of DNA transcription can be made faster and cheaper than ever before, it will likely be present in all aspects of healthcare over the near future. There is a possibility that newborns’ DNA data could be used, thus allowing us to understand risks and potential disease infection so that we can find preventive methods. Such information will be useful for the reduction of our healthcare costs.
Genomic/precision medicine: Based on DNA transcription, genomic/precision medicine aims to find an exact cause of the disease and an effective medical treatment. Genomic/precision medicine has become increasingly prevalent.
Mr. Thomas Bradley-Flannagan, Investment Specialist at J.P. Morgan Asset Management International Equity Group, said that 2022 will be a volatile year, given soaring inflation and interest rates, plus concerns about supply chain bottlenecks that are bound to pressure regional stock markets and numerous industries, including healthcare. Looking back as at the rising inflation rates over the years, it was found that the energy sector recorded the best performance, followed by healthcare sector. This means that the healthcare sector can still offer favorable returns for investors despite runaway inflation. Nevertheless, not all categories in the healthcare sector have enjoyed sound operating results. Given this, we have altered our investment strategies by selecting only appropriate categories based on the MSCI World Healthcare Index, as follows.
Overweight investment in the following stocks:
Biotech stocks that have declined in value, thus making them more attractive. Emphasis should be placed on companies with outstanding, high-quality innovations, plus long-term growth prospects.
Healthcare service stocks. Emphasis should be placed on health insurance rather than hospitals.
Underweight or maintain investment in the following stocks:
Pharma stocks: Holding of such stocks has not been scaled down, but maintained at the largest proportion of the portfolio because such stocks are stable and do not move with economic conditions.
Medical tech stocks: Holding of such stocks has been reduced. Some large cap stocks have relatively high value.
Ms. Siriporn added that if we look deeply into various categories of the healthcare sector, many categories are still robust, and the value of their stocks is not too high. These include large-cap pharmaceutical companies, as well as medium- to small-cap biotech firms that are expected to benefit from mergers and acquisitions. The healthcare sector still has a promising outlook as innovations will steadily be introduced. Therefore, investment in this sector remains interesting, thanks to favorable long-term returns.
The “Healthcare: As Important As ever” seminar can be viewed via https://www.youtube.com/watch?v=GbNYrvq30Rg.
