- COVID has shown Healthcare’s urgent need to
digitize and upgrade software and data.
- Big Tech is increasingly likely to make
acquisitions in Digital Health analytics space.
- Telemedicine is growing at over 30% annually.
(see chart below)
- The Healthcare innovation ETF is adding additional subthemes in April,
bringing to total number of subthemes to 10
- Gene Sequencing is amongst the biggest beneficiaries
of Biden’s $1.9 trillion stimulus plan.
-
US government healthcare insurance plans are boosting digital
adoption rates.
- Cloud related healthcare is amongst the fastest tech
adoption areas.
March
|
12 Month*
|
-1.97%
|
45.08%
|
Past performance is no guarantee
of future performance.
Source: Solactive, HANetf
* 12
Month figures based on 01.04.20 - 31.03.21. as fund performance.
Performance Review
The HAN-GINS Healthcare Innovation ETF (WELL) lost 1.97%
in March, but remains up over 45% over 12 months.
The leading subtheme contributors to these gains continues
to be in Medical Devices, Genome Sequencing, Neuroscience and Biological
Engineering (Biotech). They represent all of the 10 best performing holdings in
March.
For 2021 to date, Neuroscience’s best performers are led by Prothena
(up 109.2%), while Gene Sequencing leaders are Myriad Genetics (up
54.0%) and Intellia Therapeutics (47.5%). Biotech gainers in 2021 are GW Pharma
(87.9%) and Meridian Bioscience (40.5%).
The main March contributors to WELL’s return are a
combination of Medical Device and Biotech holdings below. Regeneron was our single largest
contributor - just announcing it has a new antibody drug that helps prevent
COVID. Biogen, Steris, Agilent
Beigene and Shandong Weigoa were our other top contributors.
We expect further acquisitions in this space from Big
Tech who are driving up valuations across Healthcare, particularly in the
genomics, biotech, trackers/wearables and telemedicine space. US government spending on gene sequencing via
the Biden stimulus plan will boost this area further, as it becomes
increasingly mainstream.
Company Name
|
Sub-Themes
|
March return
|
Regeneron Pharmaceuticals, Inc.
|
Biological Engineering
|
5.0%
|
STERIS Plc
|
Medical Devices
|
9.0%
|
Agilent Technologies, Inc.
|
Medical Devices
|
4.2%
|
Biogen Inc.
|
Neuroscience
|
2.5%
|
BeiGene, Ltd. Sponsored ADR
|
Biological Engineering
|
8.8%
|
Shandong Weigao Group Medical Polymer Co
|
Medical Devices
|
14.9%
|
Fisher & Paykel Healthcare Corporation Limited
|
Medical Devices
|
5.7%
|
Hologic, Inc.
|
Medical Devices
|
3.2%
|
Sysmex Corporation
|
|
3.7%
|
Sonova Holding AG
|
Medical Devices
|
3.5%
|
Past performance is no guarantee of future performance. Source:
INDXX. Data as of 31.03.2021
HAN-GINS Indxx Healthcare Innovation
UCITS ETF
– Performance
As of 31.03.21
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
HAN-GINS Indxx Healthcare Innovation
|
-1.97%
|
-1.59%
|
9.06%
|
-1.59%
|
45.08%
|
39.79%
|
Indxx Advanced Life Sciences & Smart Healthcare Thematic Indxx (NTR)
|
-1.92%
|
-1.52%
|
9.25%
|
-1.52%
|
45.91%
|
41.74%
|
Past performance for the index is in USD. Past performance
is not an indicator for future results and should not be the sole factor of
consideration when selecting a product. Investors should read the prospectus of
the Issuer (“Prospectus”) before investing and should refer to the section of
the Prospectus entitled ‘Risk Factors’ for further details of risks associated
with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/03/2021
Industry News
The Pandemic has highlighted the need for healthcare providers
to not only innovate but adopt more digital centric processes and software.
Huge cost inefficiencies and COVID demands in the US has
resulted in predictions that Healthcare will make
up just under 20% of US GDP by 2028. As Baby
Boomers age, the costs may increase further.
Innovative techniques such as gene sequencing and telemedicine hold the
prospect for better precision medicine and data gathering. The area of
Healthcare Analytics is fast growing. Microsoft’s $16bn acquisition of Nuance
Communications is the latest sign that Tach’s next battleground is in
healthcare.
The fast adoption of Cloud-based hospital usage
is speeding up the digital transformation and increasing productivity too.
Gene Sequencing and Biotech are increasingly mainstream for
healthcare solutions such as vaccines. Not
only has this led to a rerating of holdings in these areas, but they are key to precision medicine. This will allow far more targeted medicines to
tackle specific genetic mutations amongst individual patients – as opposed to
using broad prescriptions.
Remote
Wearables/Trackers are effective in providing early warning signs of
COVID. Increasingly health-conscious
people are incorporating trackers into their daily lives as reports find they
can help with a wide variety of monitoring, from
blood sugar levels (important for diabete), to tracking urine samples, heart
rates, body temperature, sleep patterns and much more. Between February and
March 2020, the number of US adults who reported intent to use telemedicine
rose from 18% to 30%.

For illustrative
purposes only. Past performance is no guarantee of future performance. Source: https://www.businessinsider.com/digital-health-ecosystem
Constituent News
In April our healthcare innovation ETF is expanding its
underlying themes to include standalone themes Telemedicine and Healthcare
Analytics. At least 100 holdings
will still comprise WELL, with Gene Sequencing and Biotech’s weightings
rising. Medical Devices will see its
weighting decline. The US country
weighting will also decline to around 77% - from above 81% currently.
Key changes include an Equally Weighted approach, no longer
a Market Cap approach. This ensures more
innovative smaller players will receive a slightly larger weighting than
before. An ESG screen is also being
added. A total of 10 subthemes will now
be covered by WELL:
- Robotics
- Nanotechnology
- Genome Sequencing
- Healthcare Trackers
- Biological Engineering (Biotech)
- Bionformatics
- Neuroscience
- Medical Devices
- Telemedicine
- Healthcare Analytics
This ensures WELL will capture key medical trends moving
forward. The ETF is being renamed Healthcare Megatrend to reflect this
broadening out of our holdings.
These subthemes are expected to benefit from significant
increased US government healthcare spending under a Biden presidency. Faster adoption rates of digital healthcare
due to COVID continue to boost WELL’s holdings in the device and biotech areas.
Top Contributors- March 2021
Company Name
|
Sub-Themes
|
March (contribution to return)
|
Regeneron Pharmaceuticals, Inc.
|
Biological Engineering
|
0.22%
|
STERIS Plc
|
Medical Devices
|
0.14%
|
Agilent Technologies, Inc.
|
Medical Devices
|
0.13%
|
Biogen Inc.
|
Neuroscience
|
0.11%
|
BeiGene, Ltd. Sponsored ADR
|
Biological Engineering
|
0.10%
|
Shandong Weigao Group Medical Polymer Co
|
Medical Devices
|
0.09%
|
Fisher & Paykel Healthcare Corporation Limited
|
Medical Devices
|
0.09%
|
Hologic, Inc.
|
Medical Devices
|
0.06%
|
Sysmex Corporation
|
|
0.05%
|
Sonova Holding AG
|
Medical Devices
|
0.04%
|
Sub-Themes
|
March
|
Weight
|
Bioinformatics
|
-0.11%
|
0.59%
|
Biological Engineering
|
-0.68%
|
21.68%
|
Genome Sequencing
|
-0.76%
|
6.77%
|
Healthcare Trackers
|
-0.06%
|
0.40%
|
Medical Devices
|
-0.06%
|
58.82%
|
Neuroscience
|
-0.49%
|
6.23%
|
Past performance is no guarantee of future performance. Source:
INDXX. Data as of 31.03.2021
Outlook
Increasingly Big Tech is moving aggressively into the
healthcare space. From Amazon buying the
largest online pharmacy and pill dispenser, to Google buying Fitbit the tracker
company – and now Microsoft acquiring Nuance Communications.
The Nuance deal reinforces the fast-growing Healthcare
Analytics and AI-Software theme in medicine.
Key features that this deal highlights for the future of healthcare
include:
- Nuance digitizes doctors & hospital
conversations from patient visits - facilitates clinical documentation.
- Nuance’s speech-recognition software capitalizes
on demand for better Healthcare software.
- Microsoft’s Cloud (Azure) - ensures Nuance’s
software become more easily accessible globally.
The Global Telemedicine Market is valued at USD 27.04 Billion in
2019 and Expected to Reach USD 171.81 Billion by 2026 with a CAGR of 37.2%.
The Cloud Healthcare market is expanding rapidly across hospitals, with
annual growth expected to be 23% through 2024.