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We keep hearing the same stories of how COVID-19 is impacting our lives on a day-to-day basis. However, the pandemic has resulted in a few exciting developments for the healthcare industry which you would do well to familiarize yourself with.
COVID-19 Is Still Here
The healthcare sector has been ever present this past year with each individual directly involved. But the past year has also seen major breakthroughs, with multiple vaccines being developed and distributed. This has allowed the public to see some normalcy during the summer and autumn periods.
Could we see ourselves finally forget COVID-19 once and fall and move on for good? At the moment the answer is a resounding no
In the last few weeks, we’ve seen a new variant appear (Omicron) in South Africa. Little is known but according to the World Health Organization (WHO) preliminary data suggests that there are increasing rates of hospitalization. As this news came out, we saw majority of vaccine maker stocks shoot up
Moderna’s (NASDAQ: MRNA) stock opened at $370.33 (£277.58) per share before settling down to $359.42 by 15:00 UTC, representing a 9% gain on the day.
Similarly, BioNTech (NASDAQ: BNTX) saw its stock open at $369.50 before settling at $360.79, a 3.5% gain from its previous close.
The stocks that saw the greatest upward movement all have one thing in common: their vaccine products can be quickly edited to address the Omicron variant and future mutations, according to the companies’ executives
As the big pharma stocks focus on COVID-19, this perhaps gives opportunities for other stocks to develop revolutionary products in the healthcare industry and potentially gain some market share.
In 2021 biotech has gotten bigger! We’re seeing it implemented in the healthcare industry through the likes of Crispr Therapeutics AG (LON: 0VRQ) using its proprietary CRISPR/Cas9 platform. CRISPR/Cas9 is a revolutionary gene editing technology that allows for precise, direct changes to genomic DNA.
CRISPR gene-editing technology system, RNA can be engineered to eliminate or edit a gene. This technology is being utilized more widely by other Big Pharmaceutical companies such as Moderna and BioNTech (NASDAQ: BNTX) who are pioneering their mRNA breakthrough in killing cancer through immunotherapy. Genome sequencing can detect a propensity to a certain type of cancer or autoimmune disease. The genome sequencing company holding the data will guide the patient to a suitable therapy or treatment plan.
The advent of 3D printing technology is also leaving its mark in specialties such as orthopedics, pediatrics, radiology and oncology, as well as in cardiothoracic and vascular surgery.
Doctors, hospitals and researchers around the world are using 3D printing for:
Preoperative planning and customized surgery
Medical devices and surgical instruments
Molds, prostheses and customizable implants
3D digital dentistry and drug administration
The advances in 3D-printing technology will attract more customized care and more high-precision medical instruments. At the same time, 3D printing is expected to make an impact in other medical specialties such as ophthalmology, regenerative medicine and bio-printing.
Some of the biggest pioneers in this industry are Organovo Holdings Inc (NASDAQ: ONVO) and EnvisionTEC which is owned by Desktop Metal Inc (NYSE: DM). Although YTD share price is down more than 60%, this could be an opportunity to purchase the stock on the cheap.
Will they, or won’t they?
While some states in the USA have legalized cannabis for recreational purposes, the jury is still out on the widespread adoption of psychedelic drugs for medical use, CBD oils and pills have been legal for some time now for medical use and it’s becoming the drug of choice for consumers to manage chronic pain illnesses.
In the last few years, psychedelics have come a long way since their 70’s hippy days. There have been studies to support the case that Psychedelics could alleviate issues such as PTSD, depression and addiction. Studies are still ongoing and when it’ll be legalized is not certain but clinical trials have started and suggested micro-dosing is seen as way to manage side effects like hallucinations.
What should Investors be looking out for?
The healthcare industry is expanding and becoming interrelated with other parts of the market. And this doesn’t look like it’ll be changing moving forward.
In 2022, there are three main ways to look at the healthcare sector:
The introduction of Bio tech
The emergence of Alternative medicines like marijuana and psychedelics
The stocks in each of these sectors carry their own risks and rewards but all have potential to really pop off in 2022.
COVID-19 is still a buzzword and this is one of the main reasons we are seeing vaccine makers such as Pfizer (NYSE: PFE) reach all-time highs, trading at around $55 with year to date returns of 47%. Even with a P/E ratio of 16.11 we are seeing the valuation is not as high as the rest of the S&P500, at 28.59.
They also pay a dividend of 2.87, meaning more conservative investors who are afraid the market could turn are somewhat protected. We’re also seeing similar trends in the other stocks in this space like GlaxoSmithKline plc (LON: GSK) and AstraZeneca plc (LON: AZN). These have managed to reach all-time highs this past year and also pay a dividend 2% or more.
However, if COVID-19 finally passes us by in 2022 could these stocks continue their growth?
The fast growth in tech in the past few years seems to be accelerating even more with new innovations, and biotech companies seem to be benefiting the most. Crispr therapeutics is the highest profile and obvious example.
However, lesser-known companies such as Take Intellia Therapeutics (NASDAQ: NTLA) has shown the first clinical proof of support to delivering CRISPR genome editing via intravenous injection in humans which saw their share price sky rocket over 100%, with current YTD returns at 82%. The study being done is alongside Regeneron which has also YTD returns of 31.14%.
The growth in this industry has attracted the attention of Jeff Bezos who is reportedly funding private company Altos Labs, an age- reversal biotech start-up. It has raised at least $270m.
A big opportunity looks like it is presenting itself in the medical cannabis and psychedelics sector. As mentioned above, there are studies supporting the medical use of these products, which in some cases performs better than traditional medicine. These studies will likely accelerate the push for legalization, with President Biden looking like he will be more lenient than the Trump administration.
However, in the past year the stocks in this space have taken a pretty big hit. YTD share price decline is in the double digits with stocks such as Tryp Therapeutics Inc (CNSX: TRYP) down more than 60%. Some of the more high-profile stocks such as Compass Pathways (NASDAQ: CMPS) and ATAI Life Sciences (NASDAQ: ATAI) backed by ex-PayPal founder Peter Thiel are down 30 to 50% respectively.
If 2022 sees wider acceptance and legalization, these stocks are in pole position for a big pump as a whole new sector will be created in the healthcare industry.
As 2022 is just around the corner, the healthcare industry doesn’t look like it’s slowing down anytime soon. The new development in COVID-19 is forcing companies to be agile and adapt their vaccines. The Biotech industry is seeing major breakthroughs which could develop whole new way treating major illnesses and diseases. And mental health looks like it may have treatment that actually works.
2022 is looking like it could be another exciting year for the industry.
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