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12 May 2021

A Healthcare Revolution

What was once the flagship industry of innovation and advancement is now a sector under threat from disruption. Lab coats, test tubes and bottles of reagent are being outdone by software programmes. Traditional scientists are being outsmarted by their new competition; software engineers.

The COVID-19 vaccine race has shone a light on the immense power of the mapping and manipulation of DNA molecules, A.K.A Genomics. Over history, vaccines have been incredibly arduous to develop, taking many years and undergoing countless trial and error. In the past, traditional “live vaccines” were grown in laboratories and required complex refining processes to get right. However, back in January 2020, before many had even heard of Coronavirus, Moderna developed their COVID-19 vaccine in just two days. Using new mRNA technology, the company was able to code the virus using its genetic sequence. The process of genetic sequencing is not particularly new, but its recent scalability is ground-breaking for an industry that spends billions on research and development (R&D) using antiquated methods.

Of course, the approval process can still be lengthy. It took over a year for Moderna’s vaccine to hit the shelves of inoculation centres around the world, with much of this delay down to the FDA, who had never approved an mRNA vaccine until now. This should improve as it gains wider recognition and understanding and, like many other crises, the Coronavirus has provided an opportunity for mRNA technology to prove itself, changing the way in which big pharma looks at developing other treatments and disease.

So, what does this mean for the incumbents? The ‘Big-Pharma’ giants have a lot of work to do in reducing their reliance on legacy research processes. Their decline in innovation is more apparent than ever; R&D spending is rapidly increasing, while returns on these investments is reaching unsustainable lows. Many of them remain too big and diverse to innovate; take GlaxoSmithKline, who on the one hand develops new drugs, and on the other sells everyday consumer products. The two do not go hand-in-hand like they once did, and the company’s vision for a breakup of the two divisions seems the only way to refocus its efforts and grow again.

On the contrary, more diverse businesses can still play their part; Croda, a UK listed chemicals company that is predominantly in the game of beauty products, has taken a significant bite out of the vaccine rollout, providing a key ingredient in the delivery and storage of mRNA shots.

Aside from the virus itself, triage and non-drug related treatments have been flipped on their head during the pandemic. Social distancing guidelines have prevented the more ‘everyday’ therapies from being administered. Technology, once again, has addressed this market a new kind of healthcare solution, aptly named ‘digital therapeutics’, which has provided a radical new way of getting treatment to those otherwise unable to travel to their doctor.

No doubt, Healthcare is going through a revolution. Like many other aspects of our lives and the economy, the pandemic has accelerated the use of new technologies that were otherwise overlooked. This is just the start.

This article was taken from the Spring 2021 issue of the publication, 1875. To sign up for our investment publications please visit www.redmayne.co.uk/publications.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
A Healthcare Revolution
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