Season 3, Post 2: Hot topics in healthcare

The Westin St Francis hotel on Union Square in downtown San Francisco is normally where the great and good of the healthcare world descend during the second week of January. This year, of course, is far from normal and one of the industry’s largest conferences (organised by JP Morgan and now in its 39^th year) therefore occurred totally virtually. As a result, your author was able to learn about some of the hottest topics in healthcare from the comfort of his own home, even if a trip to the west coast of the US would have been a more than welcome respite from winter in London. Here are some key takeaways –

1: 2020 was the year in which telemedicine became established. We listened to an impassioned presentation from Jason Gorevic, Chief Executive of Teladoc, the largest US listed provider of telemedicine. Preliminary data presented by the company showed a more than doubling in telemedicine ‘visits’ over the past 12 months, while paid members grew by an estimated 30%+ year-on-year. Per management, “we broke through the awareness barrier in terms of virtual care.” More important perhaps was the observation that Teladoc is “just scratching at the surface” of its available opportunity, which it sizes at a $250bn market for virtual care. Watch this space. We will be writing more on this trend in 2021.

2: Obesity remains a hot topic. The management of Novo Nordisk reminded us that some 650m people globally (or over 8% of the world’s population) live with obesity. Crucially, medical understanding is evolving to reflect the fact that if you can treat obesity, then you can prevent a lot of other diseases too. It is pertinent for Novo to be involved in this area owing to the high correlation between obesity and diabetes, but it was also interesting to hear that Intuitive Surgical, the world’s largest provider of robot assisted surgical tools, had witnessed a recent uptake in bariatric surgical procedures. Per Intuitive, patients are “taking things into their own hands,” requesting surgery as a way of reducing health risks and hence minimising the risks of contracting the coronavirus.

3: We can’t forget about COVID-19 (yet). Although many companies painted pictures suggesting that they were more optimistic now on business prospects compared to a quarter ago, there remained a high degree of hesitancy too. Intuitive, for example, refrained from providing forward financial guidance and said it would be reinstated only when “uncertainty recedes.”  A more constructive observation shared by several businesses was that best practice knowledge acquired during the early phases of the pandemic has resulted in better preparedness as cases have started rising once again and supply chains have been constrained as a result of renewed lockdowns. This matters, since it will likely take some time to administer vaccines to all those who wish to receive one globally. As Thermo Fisher highlighted, “there is no going back” to pre-pandemic operating practices.

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Intuitive Surgical, Novo Nordisk and Thermo Fisher. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

Alex Gunz, Fund Manager