“Nobody knew that healthcare could be so complicated”. So wrote an exasperated President Donald Trump in February 2017 as he struggled to get to grips with a replacement for the Affordable Care Act, the Obama-era law that expanded affordable medical cover to low-income Americans.
Perhaps without meaning to, Trump stumbled across one of the universal truths about healthcare investing: It can be really, really complex. There are hundreds of healthcare companies we could invest in. At most, we target between 10 and 12 of those. To get from that wider opportunity set to just a handful of investable ideas is where the real hard work comes in.
One strategy is to focus on innovation. Beyond the list of top-ten pharmaceutical companies. there’s a long tail of smaller, incredibly innovative businesses that are creating the drugs and therapies of the future. By focusing on them, we think we can uncover strong, investable ideas which are not only profitable but which could also help shape the future of medicine.
Stephen Rowntree – Newton, a BNY Mellon company