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Disruption in the Healthcare Industry

 3 min read / 

In the United States, healthcare is entirely private. As a result, there are lucrative opportunities for healthcare entrepreneurs. The Affordable Care Act (ACA) has expanded healthcare coverage to 32 million uninsured Americans. There is now a greater demand more than ever to manage health and provide prophylactic therapy.

As a result, digital health start-ups being funded at record pace. According to Rock Health’s Digital Health Funding report, one billion dollars were invested in 2013, which is more than double the funding in the digital health sector since 2011.

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Figure 1: (Source: CNBC, Rock Health)

In addition to such, as life expectancy across the world continues to increase, in addition to the swelling middle class of emerging markets, more people are able to afford medical devices, resulting in a greater drive and growth of the healthcare industry.

Apple partners with IBM

Large companies have also realised the potential in the sector and have begun investing and innovating, in the hope to capitalise on the growing market.

IBM is working in partnership with Apple and makers of medical devices, to provide health data from Apple watches to doctors and health insurers. This will enable efficient health monitoring and provide personalised treatment for diabetics and hip-replacement patients. The IBM app will enable individuals to upload their stats from the Apple’s HealthKit platform regarding their heart rate, cholesterol levels and blood pressure, to a database, which can be accessed by their physicians, enabling them to produce tailored treatment plans

Warren Buffet invests in healthcare

Warren Buffet’s portfolio manager Ted Weschler is somewhat confident of the sector, predicting their investment in DaVita HealthCare Partners will be very “valuable” within the next 5 years. DaVita and Fresenius are the two major providers of dialysis care in the US. According to the centres for Disease Control and Prevention, 20 million people suffer from chronic kidney disease in America.

Weschler explains DaVita’s dialysis treatment is an “important life extending therapy”, and has significantly improved the quality of health care. As a result of DaVita’s interventions, investors receive a high and predictable stream of cash flow. Moreover, DaVita’s merger with HealthCare Partners in 2012 has enabled a rapid expansion of its centre throughout the country.

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Figure 2 (Source: Y Charts)

Healthcare investment in the UK

The investment opportunities in the UK, at present remain modest and not as competitive as USA; however fund managers including Neil Woodford recently launched a UK-focused life science investment trust. Woodford is a passionate supporter of the biotechnology industry and hopes to increase opportunities available in the UK to avoid the brain drain to the USA. The new fund is planned to be a close-ended investment fund capped at £200 million. His current investment trust is a £3.6 billion open-ended fund, which invests in popular companies such as BT and AstraZeneca.

Whilst the healthcare and biotechnology sector is flourishing along with the funds invested in such stocks, it is advised to consider the fund managers’ record in comparison with the rest of the markets.

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Figure 3: Top performing investment funds of 2014

With recent outbreaks of Ebola, and increase in cancer incidence, the industry is witnessing more innovation and disruption than ever before. Not only will this provide medical and technological breakthroughs, there may also be considerable investment potential in those who are at the epicentre of the disruption.

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Companies

Whatsapp Launches New Venture Aimed at Businesses

 1 min read / 

whatsapp business

Whatsapp has launched a new app targeted at businesses, called the Whatsapp Business App, which they claim will enable companies to “communicate more efficiently” with present and potential customers.

This forms part of Whatsapp’s wider strategy to branch out into the corporate world. It plans to use the app to generate new revenue by charging businesses for using the extra communication tools that will enable them to better connect with their customers.

Although the app is set for worldwide release, at present it will only be available in Indonesia, Italy, Mexico, the UK and US. It includes a feature which indicates a business is authentic with a green tick badge next to their name.

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Amex: Troubled Credit Card Company Reports $1.2bn Net Loss

 2 min read / 

Amex annual report

On Thursday, American Express, or Amex, reported a net loss of $1,197m in the fourth quarter, the first net loss the company has experienced for 26 years.

Although the company stated that revenue from interest expenses was up 10% to $8.8bn, Amex said recent reforms to the US tax code meant the company incurred extra costs, including a repatriation cost on its foreign assets as well as a devaluation of its deferred tax assets. It estimates total costs amounted to $2.6m.

For the full year, net income was $2.7bn compared with $5.4bn the company earned in 2017. However, even with the estimated $2.6m the company claims it incurred from the recent tax charge, net earnings were still $5.3bn, $100m lower compared to last year.

In New York, American Express shares (AXP) took a near 1% tumble at the beginning of trade with shares finishing the day on $99.90.  JPMorgan Chase and Goldman Sachs anticipate greater earnings for 2018.

“Overall, we believe the Tax Act will be a positive development for both the U.S. economy and American Express” said CEO and chairman Kenneth Chenault. Chenault also said he will be leaving Amex in “very strong hands” when his successor, Steve Squeri takes over next month.

American Express has suffered from an ever-reducing share in the credit card market and ended its 14-year relationship with American warehouse chain Costco who in 2016 made an agreement with the market leader, Visa.

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Tencent Extends Facebook Lead

Tencent Facebook

Tencent has shot past Facebook to become the world’s most valuable social network.

Editor’s Remarks: Although Tencent briefly overtook Facebook in terms of market cap in November, the recent selloff of Facebook shares prompted the Chinese tech titan to regain the lead. Facebook investors responded negatively to news that Mark Zuckerberg’s plans to highlight family and friend-based content on the newsfeed would reduce the amount of time people spent on the site. Shares in Facebook have fallen 5% since that announcement, enabling Tencent to gain a $19bn lead over the US company. Tencent’s growth has been spurred on by its diversification away from its flagship messaging app, WeChat, and into video games.

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