Future of Healthcare Industry



Future of Healthcare Industry

A number of outside factors will effect healthcare in the future. A less predictable climate worldwide means an increase in natural disasters such as floods, droughts, famines, typhoons. The absence of the constraints of the cold war, the continued devolution of the former Soviet countries, the increase in effectiveness and the lower cost of many weapons (especially conventional small arms), growing atomization along ethnic and nationalist lines, and the growing scarcity and depletion of natural resources, point to the likelihood of increased chaos and war. For healthcare this means an increase in trauma, in malnutrition (as the chaos disrupts food supplies), of infectious disease and stress-induced illness, as well as a diversion of resources away from healthcare toward arms and reconstruction.

Other trends point toward continued and locally increased industrial pollution, which affects people's health over wide areas. Continued population growth will stretch all resources thinner. Increasing industrialization and urbanization around the world tend to break up the family, clan, and village support systems that have traditionally supported health. The increasing power and size of global corporations, less stable global finances, the increasing influence of donor nations, of central finance agencies such as the World Bank and the International Monetary Fund, and of the central government banks and finance ministries of wealthy countries, may mean even more constraint on resources for healthcare in many Third World countries.

Finally, certain purely medical changes endanger healthcare around the world. In the ongoing war between pathogens and antibiotics, overused antibiotics seem to be losing their effectiveness against the rapidly evolving pathogens. And the rapid increase in cheap international travel allows new epidemics rapidly to become global. The spread of HIV has gone essentially unchecked in much of the world. As of 1994, HIV was infecting 13 million adults a year. The WHO expects 5 million children worldwide to become infected with HIV between 1995 and 2000. Southern Asia and Sub-Saharan Africa are expected to bear the brunt of this epidemic.

Daniels (2000) mentions while valuations are at historic lows thanks to the Nasdaq Biotech Index underperforming the S&P 500 and Nasdaq Composite since US healthcare proposals were published on 26 February - and defensives are lagging the rally in cyclical stocks, Mr Hsu says that once the US government passes a bill on healthcare reform - - likely in the next month or first few months of 2010 - there should be a relief rally in biotech stocks. He expects generalist investors to reinvest in large liquid pharmaceutical companies as visibility returns to the sector (Daniels, 2000).

"Now is the time to buy because when the situation is clearer you will have missed the cheap valuations, which will already be reflected in share prices," says Mr Hsu, pointing to the resurgence in biotech valuations in 1994 after a conclusion on Hillary Clinton's healthcare proposals was reached - in this case a decision not to implement them.

To exploit what they see as an impending investment opportunity, the Biotech Growth Trust's managers and ...