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Beyond Big Pharma | Investing in the Future of Healthcare | WELL

Trends in Healthcare and Life Sciences

Health and wellness are key components to the success of any society. Demographic and economic changes, coupled with increased patient expectations, have led to an exponential increase in the pace and scale with which health care innovations are emerging and disrupting the healthcare sector worldwide.

New entrants from outside the traditional business of healthcare are redefining the $9.59 trillion global healthcare market for consumers, providers, payers, and investors in both developed and developing nations [1].

In addition, major global trends are increasing the need for healthcare services globally. These include:

1.1 Aging Populations

People worldwide are living longer. Between 2015 and 2050, the proportion of the world's population over 60 years of age will nearly double from 12% to 22%. By 2020, the number of people aged 60 years and older will outnumber children younger than 5 years.2 While some countries are aging more rapidly than others, all countries will face major challenges to ensure that their health and social systems are ready for this demographic shift.

Figure 1: Average Life Expectancy

1.2 Growth of Chronic Diseases

Chronic diseases, also known as noncommunicable diseases (NCDs), affect people across all age groups and regions. The main types of NCDs are cardiovascular diseases (like heart attacks and stroke), cancers, chronic respiratory diseases (such as chronic obstructive pulmonary disease and asthma) and diabetes. Globalization, intensive urbanization, an increase in adoption of sedentary lifestyles and population aging are all contributing to the widespread growth of chronic diseases.

According to the World Health Organization, NCDs kill 41 million people each year, equivalent to 71% of all deaths globally [3].

1.3 Air Pollution and Climate Change

91% of the world’s population lives in places where air quality exceeds WHO guideline limits [4] and the problem is growing. Common air pollution related diseases include stroke and heart disease, respiratory illnesses and cancers. A recent study indicated that air pollution may even lead to an increase in mental health issues [5].

1.4 Accelerated Healthcare Spending

Global healthcare spending is forecast to reach $8.7 trillion by 2020, compared to $7 trillion in 2015 [6]. This is attributed to spending increases on aging and expanding populations, growing emerging markets expenditures, advancements in medical technology, and rising labor costs.

Figure 2: Healthcare Spending, 2018 (% of GDP)

1.5 Lack of Human Resources

Healthcare systems throughout the world are dealing with a shortage of human resources and an alarming depletion of skilled doctors, nurses, and other healthcare professionals. According to the World Health Organization, by 2035, we face a projected shortage of 12.9 million healthcare professionals globally [7]. 

Governments are looking for low-cost, efficient solutions to reform healthcare and address these issues. Technological advancements are changing the way consumers access and receive care and are thus a potential solution to this resource problem.

1.6 Mobile Health (mHealth)

mHealth services are able to provide programs for remote monitoring, e-prescriptions, fitness and wellness and electronic records. The mobile health app market has been growing steadily over the last few years with the adoption of new technologies, new business models and new workflows that are transforming healthcare. With the prevalence of diabetes becoming a greater problem in developed nations such as the United States, the potential to use mHealth apps to help in diabetes care and prevention will be one of the main therapy fields for mHealth app publishers.

The global mHealth app market generated projected revenues of $28.32 billion in 2018, and is expected to reach $102.35 billion by 2023, a CAGR of 29.30% [8].

1.7 Precision Healthcare

A remarkable paradigm shift is occurring in health practices and outcomes that has given rise to a new era of precision healthcare. From 2017-2026, The market is expected to grow at CAGR of 11.23%, aided by the adoption of early diagnosis, increased number of adverse drug reactions cases, high prevalence of chronic diseases, and advancements in genetic science [9]. 

New Technologies in Healthcare and Life Sciences

Based on the trends listed above, a future in which healthcare delivery models are aided by new technologies may help solve today’s problems while increasing access, affordability, improving quality, and lowering costs. These technologies help with diagnoses and improve treatment, speed, quality and accuracy, thereby leading to better patient outcomes.

Based on extensive research, Indxx has identified eight technologies as having the high potential to disrupt the global healthcare industry over the next decade and beyond:

2.1 Robotics

The application of robotics in healthcare ranges from highly complex surgical robots to nursing assistants, diagnostic robots and logistics. Advancements in artificial intelligence, along with predictive analytics, are improving robotic technology and making it capable of handling more tasks. The $3.4 billion acquisition of Auris Health by Johnson & Johnson shows how lucrative the market for new surgical robotics can be [10]. 

The global medical robots market generated approximately $6.62 billion of revenue in 2018, and is expected to grow to $24.6 billion by 2025, a CAGR of 20.8% [11]. 

2.2 Nanotechnology

Nanotechnology has the potential solve some of the most complex medical issues, such as repairing damaged organs, diagnosing and treating cancer cells, removing obstructions in the brain, and vastly improving drug delivery and targeting. The application of nanotechology in the medical field is often termed “nanomedicine” and includes the use of nanomaterials, nano-scale biological devices, and nanoelectric biosensors to assist with diagnostics, analytical tools and treatment therapies.

The global nanomedical market generated $134.4 billion of revenue in 2016, and is projected to grow at a CAGR of 14.0% from 2017 through 2022 [12].

2.3 Genome Sequencing

The global genomics market size is expected to reach $27.6 billion by 2025 [13]. 

Genomic tests and sequencing enable patients to learn their genetic risks for disease and also help healthcare professionals to diagnose illnesses. Since 2001, the cost to sequence an entire human genome has dropped by several orders of magnitude, from nearly $100 million per genome to slightly over $1,000 and is expected to continue to drop [14]. Because of this, genome-wide sequencing is now also being applied to the analysis of circulating DNA in the plasma of cancer patients, as well as in individuals with other diseases. The generation of a large amount of sequencing data has led to significant growth of functional genomics and the development of recombinant and genetically engineered products that could be tailor-made for specific patients.

2.4 Healthcare Trackers

Health trackers (e.g. Apple Watches, Fitbits, etc.) and apps provide insightful body data that can go a long way in improving medical care and preventing illnesses. In 2016, more than 1.9 billion adults globally (18 years+), were overweight.15 The prevalence of diabetes in adults was estimated to be 8.4% in 2017 and predicted to rise to 9.9% in 2045 [16]. The rising incidence of chronic disorders such as diabetes and obesity are expected to boost market growth in the coming years. In addition, healthcare tracking technology is expected to become significantly more widespread.

In 2018, wearables healthcare tracker sales were estimated to be 125.3 million units. The market is expected to grow to 189.9 million units in 2022, a five-year CAGR of 11% [17]. 

2.5 Biological Engineering

Regenerative treatments can provide options that replace the currently used tissue repair solutions such as transplants, surgical reconstruction, and mechanical devices. 3D tissue engineering has been evolving rapidly and technological advancements in this field include replacement of embryo cells with proliferative stem cells, organ-on-a-chip technologies and use of 3D bio-printers to design in-vitro implants.

The regenerative medicine market is projected to reach $38.7 billion by 2024 from $13.3 billion in 2019, a CAGR of 23.8%. Cell-based immunotherapy & cell therapy products accounted for the largest share of the market in 2019 [18].

2.6 Bioinformatics

Bioinformatics is the integration of databases and software tools to extract knowledge from biological data. With increasing usage of different bioinformatics platforms in various genomic and proteomics applications, the global bioinformatics market is projected to reach $13.50 billion in 2023, up from $7.73 billion in 2018, a CAGR of 14.5% [19]. 

2.7 Neuroscience

The overall neuroscience market includes technologies for brain imaging, neurology medicines, and cognitive training. Increasing occurrences of neurological diseases such as Parkinson’s and Alzheimer’s, growing developments in the field of neuroinformatics and a rise in patented research initiatives have significantly boosted the neuroscience market in recent years.

The global neuroscience market size was $24.09 billion in 2013 and is anticipated to reach $30.80 billion by 2020, a CAGR of 2.9% [20]. 

2.8 Medical Devices

There are a number of trends leading to the growth of the medical devices market. Some of these include: increases in healthcare expenditures (especially in emerging economies); demand for smaller and more portable devices; government support for technologically superior devices; and a rise in chronic diseases.

The global medical devices market is expected to post a CAGR of over 5% from 2018-2022. The increasing market penetration of medical devices in emerging countries will have a positive impact on the market and contribute to its growth significantly over this time frame [21]. 

Indxx Advanced Life Sciences & Smart Healthcare Index

Based on trends in Life Sciences and Healthcare, as well as new technologies in the market, Indxx has developed the Indxx Advanced Life Sciences & Smart Healthcare Thematic Index.

The Index is designed to measure the performance of companies involved in the Advanced Life Sciences & Smart Healthcare sector, as defined by Indxx.

3.1 What does Smart Healthcare Look Like?

  • Appropriate treatments are delivered at the appropriate time, in the appropriate place, for the appropriate patient.
  • Clinicians use technology to more accurately diagnose and treat illness and deliver care.
  • All care delivery stakeholders across the ecosystem effectively and efficiently communicate and use information.
  • Patient data is in one, easily accessible place.
  • Patients are informed and actively involved in their treatment plan.
  • New, cost-effective delivery models bring health care to places and people that don’t have it.

 

3.2 Index Sub-Themes

Indxx has defined ‘Advanced Lifesciences & Smart Healthcare’ as being comprised of the following sub-themes:

  • Robotics: Companies in this category support the healthcare industry by providing robot companions, surgical robots, pharmabiotics, disinfectant robots or exoskeletons. 
  • Nanotechnology: Companies in this category provide nanotechnology to the healthcare industry. Nanoparticles enable physicians to target drugs at the source of the disease, which increases efficiency and minimizes side effects. 
  • Genome Sequencing: Companies in this category provide services, such as nutrigenomics, the cross-field of nutrition, dietetics and genomics.
  • Healthcare Trackers: These companies offer products like advanced wearables that help in collecting and tracking health metrics like heart rate and blood pressure, including fitness trackers that collect data related to workouts.
  • Biological Engineering: Companies in this category apply the concepts and methods of biology to solve real-world problems related to life sciences. Some of the applications include: Medical imaging, Biomaterials and Orthopedic Engineering.
  • Bioinformatics: These companies use IT in biotechnology for data storage, data warehousing and analyzing DNA sequences. This acts as an essential tool for drug development and discovery.
  • Neuroscience: Companies that are engaged in the multidisciplinary branch of biology, that deals with the anatomy, biochemistry, molecular biology, and physiology of neurons and neural circuits. The overall market includes technologies for brain imaging, neurology medicines, and cognitive training.
  • Medical Devices: Companies under this category designs, manufactures, and sells various innovative medical, surgical, and diagnostic devices for the treatment of various diseases such as peripheral vascular disease, vascular access, and for use in oncology and surgical treatments.

 

Investing in the Transformation of Healthcare: HAN--GINS Indxx Healthcare Innovation UCITS ETF (WELL)

In April 2019, HANetf and Gins Global Index Funds launched the HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL). WELL is a UCITS compliant ETF domiciled in Ireland, enabling investors to gain exposure to large, mid and small-capitalisation companies from Developed and Emerging Markets that are involved in the Advanced Life Sciences & Smart Healthcare sector.

The fund tracks the Indxx Advanced Life Sciences & Smart Healthcare Thematic Index, a rules-based benchmark capturing ~88 large, mid and small cap stocks that meet liquidity and free-float criteria. The index constituents are capped at 4.5% during an annual rebalance to reduce concentration in large-cap securities.

Fund Partner

GinsGlobal Index Funds is a global asset management company specializing in index mutual funds, structured products and capital guaranteed funds for institutional and private investors. Founded in 2000, the company manages over $5 billion across its product suite and has operations in North America, Asia-Pacific, Middle East and Africa.

Download the full whitepaper "Beyond Big Pharma | Investing in the Future of Healthcare" here

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