We seek high quality healthcare businesses that can reinvest profitably for long-term, durable growth. These companies address one or more of three key themes.
Theme 1: Innovation
Many of today’s scientific realities were just dreams two decades ago. Gene sequencing, robotic surgery and visualization are now creating exciting investment opportunities. DNA sequencing could unlock greater insights into how to develop better drugs and diagnostics. Robotic surgery drives efficiency through faster recovery times and lower complication rates. More connected medical technology provides patients with better access to care and lower costs.
Theme 2: Pricing
Some healthcare companies have relied too much on price rises for earnings growth, which has created a vulnerable business model when compared with other sectors. Technology companies, for example, cannot raise the price of one of their older phone or television models, but that’s what happens in the pharmaceutical market. Growing pressure on costs to consumers will create opportunities for companies that can provide more added value at lower costs.
Theme 3: Policy
Healthcare is benefiting from long-term, structural growth around the world. As emerging markets become wealthier, people and governments spend more on medical services, technologies and public wellness. Companies that can deliver products and services to help countries improve their healthcare performance should benefit from rising demand that fosters sustainable growth.