Healthcare Innovation Monthly Report | May
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- Biotech and Gene Sequencing dominate WELL’s year
to date performance.
- The Biden Administration is supporting Gene
Sequencing growth as it offers mainstream medical solutions.
- Big Tech is targeting more acquisitions in the
Health Analytics space after the Nuance-Microsoft deal.
- WELL added additional subthemes in April,
bringing total number of subthemes to 10.
- US government health insurance plans are boosting digital
- Cloud spending across healthcare seeing the
fastest adoption rates.
Megatrend ETF (WELL) Returns
Past performance is no guarantee
of future performance.
Source: INDXX, HANetf
Month figures based on 30.04.20 - 30.04.21.
HAN-GINS Indxx Healthcare innovation ETF (WELL) gained
4.52% in April. It is up 16.39% over 6
months and 35.61% over 12 months.
The leading subtheme contributors to these gains continues
to be in Biological Engineering (Biotech), Genome Sequencing and Medical Devices.
They represent the majority of the 10 best performing holdings in April. Bioinformatics, Neuroscience and Healthcare
Analytics companies rounded out our top performers (table below).
Top biotech performers were led by Cellink (up 100.5%),
GW Pharma (89.8%) and Beigene (33.0%). Gene Sequencing leaders include Myriad
Genetics (up 52.8%), 10X Genomics (39.7%) and Intellia Therapeutics (41.1%).
The single largest April contributors to WELL’s return were
a mix of seven of our 10 subthemes. As
Big Tech expands into the Healthcare Innovation space, Nuance Communications
jumped 21.8% due to Microsoft’s buyout offer. The Genomics and Biotech space
continues to be rerated higher as their offerings become more mainstream across
the medical field. Translate Bio was our single largest contributor, announcing
an aggressive new pipeline of mRNA treatments that include COVID-19 and related
clinical stage programs. Cellink,
Microport Scientific, Health Catalyst, Alkermes and Intuitive
Surgical 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 is likely to boost this area further. The global genomics market size was valued at USD 20.1 billion in 2020 and is expected to expand at a compound annual
growth rate (CAGR) of 15.35% from 2021 to 2028.
HAN-GINS Indxx Healthcare Innovation
As of 30.04.21
HAN-GINS Indxx Healthcare Innovation
Indxx Advanced Life Sciences & Smart Healthcare Thematic Indxx (NTR)
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 30/04/2021
The Pandemic has boosted Cloud-based hospital spending, speeding
up digital transformation beyond just Telemedicine. Data management is being
upgraded as Healthcare Analytics becomes a fast-growing subtheme. Big Tech players are targeting this space as
seen with the recent Nuance-Microsoft $16bn deal.
The US healthcare industry is embracing new treatments in a
drive to enhance productivity and offer more precision medicine. The two big winners that have enjoyed upward rerating’s
are Gene Sequencing and Biotech companies.
Huge cost inefficiencies with Healthcare now represent
almost 20% of US GDP as Baby Boomers age and present an industry that is ripe
for transformation. Many hospitals have suffered during the pandemic as
elective surgeries were cancelled which are normally a big money spinner.
The next frontier in
healthcare includes mainstream usage of Remote Wearables/Trackers which
provide effective and relatively low-cost ways of providing early warning signs
for a variety of illnesses. They can
help with a wide variety of monitoring, from blood sugar levels (important for
diabetes), to tracking urine samples, heart rates, body temperature, sleep
patterns and much more.
Digital Health is
expected to grow close to 30% annually – with North America representing almost
half of this gain. Online applications,
trackers and Telemedicine are predicted to be amongst the strongest subthemes
for years to come.
purposes only. Source:
In April our WELL product expanded its underlying themes to
include standalone themes Telemedicine and Healthcare Analytics. At least 100 holdings will always comprise
WELL. April saw both Gene Sequencing and
Biotech’s weightings rise, while Medical Devices saw its weighting decline.
Key changes included an Equally Weighted approach, no longer
a Market Cap approach. This ensures more
innovative smaller players receive a slightly larger weighting than
before. An ESG screen has also been added. A total of 10 subthemes are now covered by
- Genome Sequencing
- Healthcare Trackers
- Biological Engineering (Biotech)
- Medical Devices
- Healthcare Analytics
WELL’s broad holdings have helped it participate in strong
gains across Telemedicine, Healthcare Analytics and Medical Device themes.
- WELL is truly global – the US represents 70%. Japan
7.2%, China 6.6% and Switzerland 3.3% follow as our largest country weights.
- WELL’s updated benchmark, the Indxx Global
NextGen Healthcare Index, holds a minimum of 100 companies.
- WELL does not relax revenue thresholds to boost
the number of constituents, instead maintaining a minimum revenue threshold of
50% from target sectors.
- WELL includes more established companies –
requiring a $500m market cap versus just $200m for HEAL.
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 continues to boost WELL’s holdings in the medical device and
WELL’s benchmark has benefited significantly from large
holdings across three key subthemes – typically all above 20% weightings. These include Genome Sequencing. Medical
Devices and Biological Engineering (Biotech).
The recent 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 Cloud Healthcare market is expanding rapidly across hospitals and is
likely to dominate IT spending in this space for the next few years. Cybersecurity spending is also likely to see a
big increase in the healthcare space as privacy concerns and potential hacks,
increasingly concern most hospital groups.
For illustrative purposes only. Past performance is no
guarantee of future performance. Source: Bloomberg. Data as of 30.04.2021
The Healthcare innovation ETF