This year, COVID-19 has even more sharply highlighted the importance of innovation. With the development of vaccines, an end to the pandemic may be in sight; a vaccine will pave the way for life normalcy and economic recovery.
For healthcare investors, the success of vaccine development shows innovation within the industry, providing confidence that the sector is attractive from a long-term investment perspective.
From a near-term perspective, businesses that were negatively impacted by COVID – such as elective procedure and medical devices companies – will likely be the biggest beneficiaries from the COVID-19 vaccine. We expect these businesses will recover and these procedures become more common after the public gets vaccinated.
Additionally, as the U.S. presidential election took place this November, health policy uncertainty was a significant concern pre-election. However, this concern should abate given the election outcome. Our view is that health policy will remain mostly status quo and any changes should be incremental.
In the event of a Republican-controlled-Senate, big plans to expand healthcare coverage are unlikely. In this case, the Biden administration is also likely to pursue more incremental Affordable Care Act policy changes through administrative and regulatory authorities.
Drug-pricing reform is top of mind, and we believe major drug pricing reform will be hard to accomplish through legislation as well.
The bottom line is we think healthcare should see a stable outlook from a policy perspective. This should allow greater focus on strong industry fundamentals and innovation and may offer attractive investment opportunities.
