The COVID-19 pandemic isn’t over, but it’s far more manageable thanks to the efforts of health care workers—including doctors, nurses, scientists, researchers, and vaccine developers, according to Fidelity’s Eddie Yoon.
The next focus for many biotech firms, drug makers, and services providers will be to leverage innovations and lessons learned during the pandemic to solve other big health care problems, says Yoon, sector leader and manager of Fidelity® Select Health Care Portfolio (FSPHX).
“As a next step, we need to fix inherent weaknesses in the health care delivery system and the shortage of capacity in the U.S. drug-supply chain, and I’m already looking for the companies I think will help address these issues,” he notes.
For example, Yoon thinks approaches used to rapidly develop COVID-19 vaccines could speed the development of future vaccines and other cutting-edge therapeutics that target other devastating diseases. This could help companies that are using these unique modalities to advance their drug discovery and clinical pipelines.
He also expects additional government investment in public health infrastructure, including pandemic preparedness, infectious disease awareness, and a deeper, more robust global supply chain. This could benefit Danaher (DHR), a significant position in the portfolio (at the end of October) that Yoon believes is helping to expand U.S. testing and bioproduction capacity.
Shifting the primary focus from COVID-19 to other public health issues also could help medical devices companies such as Penumbra (PEN), which has seen improved sales of its Indigo® Aspiration System used to remove blood clots. He adds that the firm is now working on multiple new products in some of the most exciting areas, such as integrating virtual reality-based therapeutics to help patients recover from strokes.
Lastly, managed care providers such as UnitedHealth Group (UNH) and Humana (HUM) continue to emphasize taking costs out of the health care system while simultaneously improving clinical outcomes and the overall patient experience, even as they face rising near-term costs from more patients returning to doctors’ offices for routine care and previously delayed procedures. Value-based care is here to stay, Yoon believes, and will fundamentally transform the U.S. health care economy over the next decade. He expects to see long-term winners and losers with this generational change.
“I’m encouraged by the innovations I see under development and the relatively attractive prices for many of the stocks in the sector, which is why I’m finding no shortage of investment ideas,” Yoon says.
Securities mentioned were fund holdings as of October 31. For specific fund information, including full holdings, please click on the fund trading symbol above.
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