IN FOCUS6-8 min read

How tech and medical advances are transforming healthcare investing



John Bowler
Fund Manager, Global Healthcare

Covid-19 aside, the main drivers of healthcare remain unchanged: there is accelerating demand for healthcare services as people are increasingly living longer. Governments around the world face budget pressures with the ever-growing demand for health services, this makes the need for more efficient health services a necessity and not an option.

Technology – the new insights in the biology of diseases and new treatment modalities - is also driving a tremendous wave of new medicines that offer a step change in patient outcomes. Just as exciting is the use of information age technology to make healthcare provision more efficient and improve quality.

What impact is technology having on the healthcare sector?

We are at the start of a transformational shift in knowledge and technology. The advancement of medical science in recent years has led to many new insights into disease biology which has driven a steady increase in innovative new medicines and associated diagnostics.

Medical technologies are contributing to novel therapeutic devices that are impacting a number of complex diseases, such has reducing the devastating impact of strokes. Digital health is already making healthcare provision more efficient and helping to drive better patient outcomes. It will serve to democratise the management of healthcare and well-being, providing individuals with the tools and data to take greater responsibility for their own personal health.

While these changes have been some time in the making, we are now at a positive inflection point where we will start to see genuine innovation and advancement across the sector. This will drive the returns of those companies at the forefront of innovation. This can be seen by a number of new, innovative drugs in areas such as oncology and gene therapy that are at the point of commercialisation. Meanwhile, the Covid-19 pandemic has accelerated the adoption of telehealth and digital services.

What are currently the most interesting sub-sectors in healthcare?

Sub-sectors most impacted by Covid-19 – hospitals, care providers and consumer healthcare (for example, hearing aids) are seeing a recovery in procedure/patient volume that is helping drive performance and we expect this will continue into next year. The rapid scale-up in Covid-19 vaccine production and the growing realisation that vaccinations will persist means there is still the potential for growth for companies involved in the production supply chain.

While sub-sectors such as biotech and healthcare technology have done well, there remain opportunities in the mid-term. There is a steady stream of exciting new biotech companies emerging from several geographies – these should benefit from either hitting key clinical trial milestones or as targets from acquisitive larger companies that need new products. 

The lockdown period did shine a light on the value of telehealth and digital health services. This is being developed further into new tools to better manage chronic diseases such as diabetes using remote monitoring and artificial intelligence-enabled behavioural health products to improve outcomes. This trend is still relatively early in its adoption and therefore remains a source of mid- to long-term growth.

What about sustainability?

There are three forces that we believe have the potential to make healthcare a sustainable growth area for many years to come. The first factor is demographics. Increasing numbers of older people around the world is driving an accelerating demand for healthcare services.

The second factor is efficiency. The financial burden to national budgets and employer-sponsored health insurance is creating the necessary force for change.

The final critical factor is technology. There is a steady stream of novel and disruptive technologies in both medicines and technology/data that are providing new approaches to managing diseases. These are providing better patient outcomes in a more cost-effective manner.

The current Covid-19 crisis has just shone a large spotlight on the importance of these technologies. However, it’s the pace of rapid change across the sector that is now the most compelling reason for investors to consider the sector.

Important Information

The contents of this document may not be reproduced or distributed in any manner without prior permission.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect nor is it to be construed as any solicitation and offering to buy or sell any investment products. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Any security(ies) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. Opinions stated are valid as of the date of this document and are subject to change without notice. Information herein and information from third party are believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.

Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.

This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.


John Bowler
Fund Manager, Global Healthcare


In Focus
Alpha Equity
Global Transformation
Market views
Follow us

Contact Us

Level 33, Two Pacific Place, 88 Queensway, Hong Kong

(852) 2521 1633

Online enquiry: Please complete the web form below and we will reply as soon as possible.

Contact us

The investments mentioned in this website may not be suitable to all investors. The information contained in this website is provided for reference only and does not constitute any investment advice. Investors are advised to seek independent advice before making any investment decision.

Investment involves risk. Past performance is not indicative of future performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please refer to the relevant offering document including the risk factors.

This website is intended for Hong Kong residents only. Non-Hong Kong residents are responsible for observing all applicable laws and regulations of their relevant jurisdictions before proceeding to access the information contained herein. Schroder Investment Management (Hong Kong) Limited is regulated by the SFC. The website (excluding Schroder Provident Plan related pages) has not been reviewed by the SFC.

The website is issued by Schroder Investment Management (Hong Kong) Limited.