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Healthcare Innovation Monthly Report | July

 

Learn more about our health ETF here.

  • Big Tech is actively acquiring Healthcare data companies, with the Google and Microsoft deals being just the beginning (HCA & Nuance).
  • COVID was a huge gamechanger, with Gene Sequencing and Telemedicine being fast tracked by 5 years.
  • Cloud-based hospital spending is amongst fastest growing IT space.

 

Performance Review

HAN-GINS Indxx Healthcare Megatrend UCITS ETF (WELL) rebounded strongly in June, gaining 8.1%.  It is up 27.68% 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 for the health ETF in June. (table below).

Following Microsoft’s acquisition of Healthcare Analytics company Nuance, the subtheme has enjoyed a strong rerating. For 2021 a key theme is the merging of Big Tech and Healthcare. 

Large recent deals by Google, Amazon and Apple shows the digital revolution is impacting the healthcare space.

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. [1]   

Cloud computing is facilitating telemedicine, Wearables and Healthcare Data services. Even Genetic Sequencing is benefiting from the global use of Cloud and uploading phased trial data.

 

Healthcare Megatrend ETF Performance

June

12 Month*

8.10%

27.68%

Past performance is no guarantee of future performance. Source: Solactive, HANetf * 12 Month figures based on 01.07.20 - 30.06.21.

 

Company Name

Sub-Themes

June

INTELLIA THERAPEUTICS INC

Genome Sequencing

116.05%

BEAM THERAPEUTICS INC

Genome Sequencing

64.53%

TRANSLATE BIO INC

Genome Sequencing

52.92%

CRISPR THERAPEUTICS AG

Genome Sequencing

36.99%

BIOGEN INC

Neuroscience

29.46%

TWIST BIOSCIENCE CORP

Biological Engineering

24.17%

PHREESIA INC

Healthcare Analytics

23.84%

NATERA INC

Genome Sequencing

20.60%

RESMED INC

Medical Devices

19.76%

ALNYLAM PHARMACEUTICALS INC

Biological Engineering

19.39%

Past performance is no guarantee of future performance. Source: INDXX. Data as of 30.06.2021

 

HAN-GINS Indxx Healthcare Innovation UCITS ETF – Performance (As of 30.06.21)


1M

3M

6M

YTD

12M

SI

HAN-GINS Indxx Healthcare Megatrend

8.10%

9.10%

7.37%

7.37%

27.68%

52.52%

Indxx Global NextGen Healthcare Index (NTR)

8.19%

9.23%

7.56%

7.56%

28.19%

54.82%

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 30/06/2021

 

Industry News

The Digital Health market is expected to grow at a 30% compound growth rate through 2025, dominated by the US and parts of Asia. (See image below).

Reratings across the Gene Sequencing and Biotech space continue due to the success of COVID vaccine and the continued digitalization of healthcare. Since COVID and the WFH phenomenon, the industry has raised record amounts of new capital.  New CRISPR technology is fuelling the race for more precision or customised medicine.

CRISPR makes it much easier to determine the genes and proteins that cause/prevent disease. It helps identify new targets for potential drugs. As of the 2nd quarter 2020, there were 724 active companies globally focused on developing CRISPR technology and almost 50 clinical trials involving CRISPR.[2]  

Hospitals are now amongst the fastest adopters of cloud technology, boosting their commitment to Telemedicine and Wearables. Healthcare Analytics is growing into a sizable subtheme, with Big Tech aggressively buying up smaller players in this area.  The recent landmark Microsoft – Nuance deal for almost $20bn has set the stage for many more deals in this space.[3] 

Wearable devices that provide real-time tracking of various aspects of health, including sleep and physical activity, are seeing a surge of investment. The global wearable medical devices market reached $16.6bn in 2020, with an expected compound annual growth rate of 26.8% between 2021 and 2028.[4] 

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 reratings are Gene Sequencing and Biotech companies. 

Huge Growth Rate – Digital Health Market to 2025

For illustrative purposes only. Source: https://www.vynzresearch.com/healthcare/digital-health-market

 

Constituent News

The top 4 contributors to returns were Gene Sequencing holdings Intellia Therapeutics, Beam Inc., Translate Bio and CRISPR Therapeutics.

WELL has expanded its underlying themes to include standalone themes Telemedicine and Healthcare Analytics.  At least 100 holdings will always comprise WELL. Gene Sequencing and Biotech’s weightings have risen, while Medical Devices saw its weighting decline.   

Key changes include the following:

  • Holdings now all equally weighted - emerging healthcare well represented.
  • Biotech, Genomics, Healthcare Analytics & Telemedicine - larger now
  • Good exposure to Large, Small- and Mid Cap stocks.
  • Increasingly global – with the US at 73%. Japan 7.1%, China, 6.7% and Europe 12%.
  • Benchmark holds minimum 100 companies, plus an ESG screen.

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 WELL:

  • Robotics
  • Nanotechnology
  • Genome Sequencing
  • Healthcare Trackers
  • Biological Engineering (Biotech)
  • Bioinformatics
  • Neuroscience
  • Medical Devices
  • Telemedicine
  • Healthcare Analytics

 

These subthemes are expected to benefit from significant increased US government healthcare spending under Biden.  Fast tracked adoption rates of digital healthcare, due to COVID, continues to boost WELL’s holdings in the medical device and biotech areas.

Top Contributors – June 2021

Company Name

Sub-Themes

June (Return Contribution)

INTELLIA THERAPEUTICS INC

Genome Sequencing

1.13%

BEAM THERAPEUTICS INC

Genome Sequencing

0.63%

TRANSLATE BIO INC

Genome Sequencing

0.51%

CRISPR THERAPEUTICS AG

Genome Sequencing

0.36%

BIOGEN INC

Neuroscience

0.29%

TWIST BIOSCIENCE CORP

Biological Engineering

0.23%

PHREESIA INC

Healthcare Analytics

0.23%

NATERA INC

Genome Sequencing

0.20%

RESMED INC

Medical Devices

0.19%

ALNYLAM PHARMACEUTICALS INC

Biological Engineering

0.19%

 

Sub-Themes (contribution)

YTD

June

Weight

Telemedicine

-1.67%

0.12%

5.23%

Genome Sequencing

0.88%

3.77%

21.68%

Medical Devices

2.48%

0.99%

26.28%

Neuroscience

0.18%

0.38%

7.11%

Bioinformatics

0.12%

0.07%

4.08%

Biological Engineering

0.03%

1.23%

23.79%

Healthcare Analytics

0.91%

0.77%

8.85%

Robotics

-0.24%

-0.01%

1.74%

Healthcare Trackers

-0.71%

0.05%

1.26%

Past performance is no guarantee of future performance. Source: INDXX. Data as of 31.06.2021

 

Outlook

WELL’s benchmark continues to benefit from large holdings across three key subthemes which are all above 20% weightings.  These include Genome Sequencing. Medical Devices and Biological Engineering (Biotech).

In June, Genome Sequencing was a standout as the best performing subtheme, alone contributing almost a 4% gain.  This was followed by Biotech, Medical Devices and Healthcare Analytics.

The Cloud Healthcare market is expanding rapidly across hospitals and is likely to dominate IT spending in this space for the next few years.[5]  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. 

Learn more about our health ETF by visiting the fund page.

 

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