2 min read Covid is going to be a long story, but the silver lining is the positive changes we will see in the healthcare sector. These changes point to lofty opportunities for investment.
Let’s look at the foreseeable healthcare trends post-COVID. What do current experts in the field see coming up, what sectors have COVID-19 accelerated, and what future trends and changes in the healthcare industry should the investor look for?
Bottom-Up Budgeting
In pharma and the medical device space, we see that companies cannot spend as much money as they have been able to in the past. They cannot get into hospitals and operating rooms or conduct clinical trials as they were able to before COVID because of the amount of space and resources required to manage the disease.
These restrictions also cause the spending lifecycle of a medical company to change.
Typically, the most considerable output of resources happens in the middle of their life when they reach clinical trials. However, companies now cannot use the planned funds in this way, which means that they need to rethink and strategize their budget. By doing this, they can cut between 20 and 30% of the G&A budget, which allows them to at least a few more months, which hopefully can get them out of COVID and raise money easier again.
As an investor, this means that you should be looking at a medical company’s bottom line. The new environment being created in the healthcare sector calls for bottom-up budgeting. Companies need to understand the cost, their time to market, and what they need to succeed.
Re-evaluation of Orphan Drugs
A hugely positive trend we see resulting from COVID is the re-evaluation of orphan drugs. Orphan drugs are government-funded pharmaceutical agents used to treat rare diseases. They are typically easier to get through the FDA, and pharma companies can sell them at high prices. But due to changes in the U.S. government, the cost of orphan drugs is going to be re-evaluated.
This is a significant shift, which we have already begun to see and will continue to become even more substantial. This shift means two things. One is that orphan drugs won’t be as valuable to invest in. The other would be a redirection of funds to other circuits such as cancer drugs.
Increased Government Investing in Medical Infrastructure
The world is seeing that the medical infrastructure is globally underfinanced.
We are experiencing the missing number of beds, doctors, nurses, and more.
Over the next decade or two, the government will be investing more capital in infrastructure in medical systems- good news for the big med-tech companies, and this increased funding will put pressure on hospitals to turn out much better results.
We’ll likely see hospitals shift towards using home treatment digital health monitoring at designated clinics to shorten the required length of stay a patient has to go to the hospital for care. These things can only be done with technology.
Read more in the TEN Capital eGuide: TEN Capital eGuide: Investor Perspectives on Chronic Pain
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group
