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Healthcare sector bullish despite political uncertainty

Targeted and gene therapies rated as major advances ahead of Jefferies conference in London

A new report from Jefferies based on a poll of 500 healthcare investors and CEOs has found an optimistic view of the sector overall, despite concerns about political and regulatory uncertainty, including Brexit.

It’s notable that while 22% of respondents felt Brexit would have a very negative impact on the sector, a clear majority (64%) felt that its impact would be neutral or only slightly negative. That’s hardly a vote of confidence – less than 3% think Brexit will be positive for healthcare – but it does suggest that the sector expects to be able to manage the transition.

Trump

Across the Atlantic the big topic has been drug pricing, but despite the rhetoric coming out of the White House, most of the those polled (92%) do not think there will be meaningful reforms before the next presidential election. “Drug prices are expected to keep rising, but at a muted pace,” says the report.

The Healthcare Temperature Check report has been released to presage the annual Jefferies conference, which gets underway in London tomorrow and is expected to gather around 2,000 delegates to hear presentations from dozens of companies ranging from small biotech start-ups to pharma multinationals.

Among the report’s other findings are that investors are on the whole very confident about healthcare’s prospects and are planning to increase their investments in health-related stocks, expecting the sector to outperform the wider market.

Interestingly, while North America is seen as having the greatest opportunities among institutional investors and corporates, an overwhelming majority of private equity investors – 75% – view  Europe more favourably. That’s excluding the UK however, which along with China and other world regions is viewed as having fewer opportunities in 2019.

There is also a feeling that 2018’s buoyant mergers and acquisitions trend will continue into 2019, at least at the same level and possibly even higher, driven by big companies looking to tap into strong cash balances and consolidate their market positions, pipelines or geographic reach.

Among the top-rated innovation areas to watch in 2019 were targeted therapies (40%) and gene therapy (31%), followed by artificial intelligence (17%)  and the microbiome (4%).

“It is encouraging to see how optimistic many [leaders] are, particularly against a backdrop of heightened volatility across markets,” said Tommy Erdei, Jefferies’ joint global head and European head of healthcare investment banking.

“The findings give a compelling snapshot of the agenda for 2019,” he added.

Article by
Phil Taylor

14th November 2018

From: Marketing

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