Three firms that will revolutionise healthcare

Professional investor Paul Major of the BB Healthcare Trust selects three promising medical stocks to buy now.

Each week, a professional investor tells us where he'd put his money. This week: Paul Major of the BB Healthcare Trust selects three promising medical stocks.

The pace of medical breakthroughs has continued to accelerate, fuelled by a combination of technological developments and advanced treatments. Technology is not only helping to develop new cures, but also offers the potential substantially to lower the cost of healthcare for patients and providers.

There is understandably a focus on the price of innovative medicines. However, the proportion of healthcare expense accounted for by drug costs (less than 10%) has remained broadly stable over time. Cost inflation in the other 90% is less visible, but nonetheless important if we are to address the affordability crisis in healthcare.

The coming years will see the widespread adoption of novel technologies that offer the potential not only to improve care, but also to help avoid substantial future healthcare costs that our traditional delivery model makes inevitable.

How should an investor address this new opportunity? We think that an unconstrained "best-ideas" approach can offer a portfolio that is diversified in its exposure to these new opportunities, but also focused in terms of the number of holdings to offer a high level of operational gearing into the healthcare transformation story.

See your doctor from home

Teladoc (NYSE: TDOC) is a telemedicine provider offering patients a range of services to access medical advice, diagnostic services and prescriptions remotely. We are all aware of the increasing demands on GPs' time and the costs associated with unnecessary visits to hospitals. Teledoc offers lower cost, more convenient interactions with healthcare professionals and matches doctors' time with patients' needs truly a revolution at the frontline of care.

A nudge to visit the doctor

New medicines offering improved safety, efficacy and convenience have revolutionised the treatment of many diseases, such as the longer-acting insulins that allow diabetics better control of blood sugar throughout the day and into the night. Nonetheless, we still have high medical costs associated with the rare but serious episodes of very low blood sugar that patients must contend with. DexCom (Nasdaq: DXCM) develops and distributes discreet wearable monitors, which are an angel on the patient's shoulder, keeping them aware of their blood sugar and forewarning of potential dangerous events well ahead of time, saving money and improving outcomes.

A cancer detector

As we manage chronic diseases better, it is inevitable that cancer will claim more lives. The issue here is less the absence of potentially curative drugs than sufficient warning of this insidious killer's presence to allow early action. However, we have seen rapid progress in identifying the genetic fingerprints of the cellular changes that lead to cancer and, ultimately, routine screening for these markers will be available. If you can detect cancer before it spreads, outcomes are greatly improved. Products by Illumina (Nasdaq: ILMN) industrialise DNA screening, making it both rapid and cheap.

Recommended

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
23 Jan 2023
After slumping 46% last year, what's next for Scottish Mortgage?
Investment trusts

After slumping 46% last year, what's next for Scottish Mortgage?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust fell by 46% last year. We take a look at the trust's performance and dis…
18 Jan 2023
The top ten dividend stocks in the FTSE 250
Share tips

The top ten dividend stocks in the FTSE 250

The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investo…
17 Jan 2023
7 cheap investment trusts to buy
Investment trusts

7 cheap investment trusts to buy

Max King takes a look at six cheap investment trusts to buy today after what has been a terrible year for the sector.
21 Dec 2022

Most Popular

Top 10 areas most immune to a house price crash
House prices

Top 10 areas most immune to a house price crash

New research pinpoints the towns, cities and London boroughs most insulated from house price falls this year - and which are the most exposed.
31 Jan 2023
When will interest rates go up?
UK Economy

When will interest rates go up?

New interest rates will be announced today (2 February) – we look at what to expect.
2 Feb 2023
Top 10 up and coming property areas in the UK
Property

Top 10 up and coming property areas in the UK

New research shows rural areas make for the best investment, while London boroughs dominated the bottom 10
31 Jan 2023