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Healthcare’s Technology Revolution: Riding the Crest of Innovation
Healthcare is in the midst of a technology-driven revolution. Powered by Artificial Intelligence (AI) and robotics, innovations across the entire Healthcare spectrum present investors with new investment opportunities and higher earnings potential.
The Healthcare industry is at an exciting stage of transformation. Fuelled by advanced analytics, Artificial Intelligence (AI) and robotics, it is undergoing a technology-driven revolution. The emergence of new treatments and tools can lead to better efficiencies and higher profit margins.
New treatments gathering pace
Research and development (R&D) spending to discover new disease treatments has escalated in recent years. The race for a COVID-19 vaccine has also accelerated innovation and sped up new solutions to market. For example, mRNA4 technology has gained widespread acceptance and is now used in several COVID-19 vaccines.
The pandemic has had the effect of supercharging R&D activity, leading to sustained investment in the sector going forward.
Advanced AI is also transforming biomedical research, fast-tracking the search for new cures (Figure C5). Gene sequencing costs have dived 90%5 over the past decade. A better understanding of the genetic code has seen greater early-stage disease detection and improved drug efficacy.
Figure C5. Technological breakthroughs have facilitated research into new treatments.
Note: A nucleic acid is a chain of nucleotides which stores genetic information in biological systems. It creates DNA and RNA, which store the information needed by cells to create proteins.
Source: Wellington Management, April 2021
These advances have enabled biopharmaceutical companies to create greater value by bringing a pipeline of new therapeutics to market. This not only improves the quality of life but also provides investors with more investment opportunities to tap on.
New tools transforming healthcare delivery
Technological innovations are disrupting the Healthcare services ecosystem. Driven by software, data and hardware advancements, sophisticated tools are helping healthcare professionals to raise productivity, improve diagnosis and deliver optimal care to patients. Many digital health markets are expected to grow by at least 8.0% per annum6.
Increasingly, AI-powered software services can aid in care delivery. Large pharmaceutical and healthcare providers are tackling Healthcare’s biggest challenges by setting up innovation labs to develop solutions such as smart patient care platforms.
They are accelerating digitalisation and leveraging on machine learning to improve diagnostic accuracy. Healthcare providers in Japan7 and China8 are already using Healthcare apps for online medical consultations, shortening patient wait times and boosting productivity.
Digitalisation across the Healthcare value chain has enabled the widespread collection of individual data. This has allowed healthcare professionals to use data analytics to better understand diseases and tailor intervention strategies to the individual, leading to the growth of personalised medicine.
Innovations in medical hardware and devices are raising Healthcare standards. From surgery to rehabilitation, robots are increasingly used to treat patients in hospitals. This is supported by both advanced robotics hardware and improved software management systems.
The wearable devices market for medical monitoring and diagnostics such as smart watches and wearable monitors has also grown considerably. In the US, the use of wearables has increased from 9.0% to 33%9 over the last four years. Sensors and smart algorithms in wearable devices can collect data for health monitoring, diagnosis and treatment.
Riding the innovation wave
As innovations continue to revolutionise the delivery of Healthcare solutions, this will translate to better efficiencies, higher margins and earnings. This opens up new growth markets in Healthcare services (Figure C6). Investors can ride on this wave of innovation to capture new investment opportunities.
Figure C6. Digital health markets expected to grow by at least 8% per annum through 2024.
1Compound annual growth rate 2Clinical-decision support 3Value-based care
Source: BCC Research; BIS Research; Fior Markets; Global Market Insights; Grand View Research; McKinsey Healthcare Systems & Services Practice research; Pitchbook Data; Rock Health; Technavio, December 2020
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4 mRNA – messenger RNA, which carries instructions for cells to produce a particular protein.
5 US National Human Genome Research Institute, 2020
6 McKinsey, December 2020
7 Financial Times, The Government of Japan, February 2021
8 China Briefing, Dezan Shira & Associates, July 2020
9 Business Insider, January 2021