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Michal Marszal. I am the co-manager of the CIBC Technology Fund and the Renaissance Science and Technology Fund. And, I work for CIBC Asset Management.

Let’s talk about how COVID-19 will impact global healthcare over the next six months or so, in the more medium term. I would say that there will be a number of impacts on the various sub-sectors in global healthcare, that will have various paths to resolution. Let’s also dive a little bit more deeply into the specific segments of global healthcare that will see both a positive and negative impact from either a temporary or more permanent lockdown due to COVID-19.

I would say that the aforementioned biopharmaceutical space, which clearly benefits from the relevant developments in the space, would benefit from the actual conditions being in place for longer and having a greater degree of macro-economic impact, as demand for the services and the willingness to fund them would necessarily increase. So some of the pharmaceutical names specifically exposed to the vaccine development clearly benefit.

I would say the other beneficiary of this would be companies in the services space, especially companies that are exposed to telehealth. So, remote diagnostics, remote contact with physicians: these will obviously be both in near and long-term positive impact on the development. A lot of current major players in the United States in managed care, such as CVS or UnitedHealth are actively exploring adding these types of services to the menu of offering to their clients.

The other names that are benefiting within the insurer space, so managed care, are companies that are more exposed to some of the government programs. So as lockdowns impact the macro-economic environment, some of the enrollees in these programs will be shifting from commercial coverage over to government-based coverage, mostly Medicaid. Companies that are highly exposed to Medicaid here, for example, Anthem, will be the beneficiaries of that. And from an investment perspective, that is a fairly good hedge against potential macro-economic downturn that would be lasting more than we currently expect.

Those are probably some of the best examples of the beneficiaries of both COVID-19 presenting itself for a longer than the more optimistic scenario, and also some of those downstream effects lasting for longer than we currently expect as well. The major negative impact here is really, again, touching on some of the direct impact. Those are elective procedures, the demand for medical devices, the demand for typical diagnostic tests. So whether we’re talking about lab equipment, laboratories themselves, hospitals and clinics, that rely on a greater pool of profits being derived from elective procedures rather than treating only the CPR COVID-19 cases. The manufacturers of medical devices, especially some of those that are exposed to the orthopedic space. Those would see a substantial drop in demand for their product, and the degree of that demand evaporating would really be highly correlated with the patterns of utilization, and the broader macro-economic situation in the major developed countries.

Funds:
CIBC Global Technology Fund
Renaissance Global Science and Technology Fund
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