Health Care Prognosis: Disruption Ahead
January 31, 2019
I am excited about the rapid adoption of innovation that is extending across all sectors, including Health Care, an industry driven by the application of a wide array of technologies. Technology is quickly transforming medical treatment and insurance payment systems, diagnostic processes and medical equipment, research and development, regulatory compliance and safety protocols, as well as many other important processes within the industry. Given the profound impact that these advancements are having on society, it’s a topic worth getting excited about.​

​Health care companies and tech providers are working together to transform how doctors treat patients while simultaneously reducing health care inflation. For example, Internet 3.0​ technologies applied in the Health Care sector are enabling advanced data sharing and analysis of genetic research that has been decades in development. These expedited processes allow scientists to improve both clinical results and the efficiency of research and development trials to design better targeted drugs based on an individual’s unique genome. 

Internet 3.0 is also helping keep medical devices on the cutting edge. Tandem Diabetes Care currently boasts the smallest durable insulin pump on the market. The pump’s software can be updated rem​otely, a feature enabled by the speed and efficiency of Internet 3.0. Other small companies, such as Abiomed​, are producing state-of-the-art treatment devices that benefit from ever continuing improvements in technology. Abiomed’s Impella heart pumps are among the world’s smallest and can assist or even replace the pumping of a heart during high-risk cardiac surgeries.

Health care innovation is also transforming communication and delivery models. Today many patients need to travel to emergency rooms or visit their doctor’s offices, but advancements in delivery models are revolutionizing health care. The increased interconnectivity resulting from Internet 3.0 is enabling video conferencing between patients and doctors, thereby supporting instantaneous evaluations, as well as simplifying administrative tasks such as scheduling doctor visits or monitoring a patient’s compliance with a doctor’s prescribed therapy. In addition to patient-provider communication, Internet 3.0 technologies are being used to improve collaboration between individual health care companies. For example, Veeva Systems is a leading provider of cloud-based solutions such as customer relationship management software for the life sciences industry as well as regulatory and safety compliance information management for pharmaceutical and other health care products.

We also expect to see artificial intelligence make waves​ across the Health Care sector. Ninety-one percent of 500 health care leaders expect to see a positive return on investment from artificial intelligence (AI) in four years and by 2025, the market for health care AI is expected to exceed $34 billion​. AI could massively transform personalized medicine by improving productivity and accuracy of diagnostic imaging, as well as by increasingly automating treatment planning.

​Technological advancements in the medical industry are likely to continue to lead to cost savings for patients and potentially attractive opportunities for investors. As a result, investors may want to keep a close eye on emerging health care technology companies. At Alger, we certainly will. ​

Fred Alger & Company, Incorporated is the parent company of Fred Alger Management, Inc. The views expressed are the views of Fred Alger Mana​gement, Inc. as of January ​2019. These views are subject to change at any time and should not be interpreted as a guarantee of the future performance of the markets, any security or any strategies managed by Fred Alger Management, Inc. These views should not be considered a recommendation to purchase or sell securities.  Individual securities or industries/sectors mentioned, if any, should be considered in the context of an overall portfolio and therefore reference to them should not be construed as a recommendation or offer to purchase or sell securities.

​​Risk Disclosure: Investing in the stock market involves risks, and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Technology and healthcare companies may be significantly affected by competition, innovation, regulation, and product obsolescence, and may be more volatile than the securities of other companies.

The following positions represented the noted percentages of Alger assets under management as of December 31, 2018: Tandem Diabetes Care, 0.53%; Veeva Systems, 0.52%; and Abiomed, 0.84%.

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