Medical Technology

Health care is a market with great potential – also for the investor. Yet finding the most promising investment opportunities is not an easy task…

(c) Wirthwein AG (CC BY-SA 3.0)https://creativecommons.org/licenses/by-sa/3.0/deed.de

(c) Wirthwein AG (CC BY-SA 3.0)https://creativecommons.org/licenses/by-sa/3.0/deed.de

Healthcare is a market with enormous potential – for service providers, industry, and last but not least, for investors. The world’s population is aging, and chronic diseases are growing ever more common. Industrialized countries are spending more and more on their healthcare systems and affluent patients are increasingly willing to invest in diagnosis and therapy.
At the same time, new developments such as genetic and stem cell technology, big data, artificial intelligence, and nanotechnology are expanding the possibilities of modern medicine beyond what we could have imagined only a few years ago. Technology companies such as Apple, Alphabet, and Amazon are now also joining in. Investors who wish to get on board with these developments may elect to invest in an ETF – one, for example, that tracks the MSCI World Health Care Index.
As is the case in most business sectors, however, direct investment in innovative companies is a more interesting option, particularly for more substantial investments. The medical technology sector is an attractive choice, in part because it is less risky than the pharmaceutical industry. A long-time engine of growth in the healthcare sector, medical technology is currently enjoying renewed momentum and dynamism due to the impact of digitalization. Apps, artificial intelligence, laser and sensor technology, mixed reality, and telemedicine are benefiting both physicians and patients, and are blurring the boundary between medicine and lifestyle trends.
But in the current gold rush, selecting the most promising investment opportunities from the wealth of startups isn’t easy. Demographic developments provide a solid and sustainable basis for the medical technology sector, and one which is relatively impervious to cyclical economic trends. However, health policy decisions could create – or eliminate – mass markets for specific therapies virtually overnight. Investors risk finding themselves sidelined. For this reason, individual investors would be well advised to seek expert advice from the fields of medicine, health industry, and health policy both before and during the investment process. ■

Jens Spudy is executive partner of Spudy Family Office

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