Covid-19 and the demands of lockdown have wrought permanent change across the healthcare sector. Here, BNY Mellon healthcare analyst Matthew Jenkin discusses the implications for the sector and the companies within it.
Telemedicine in numbers
- 10%: The percentage of healthcare providers who had seen patients via telemedicine ahead of Covid-19.
- 70%: The percentage of healthcare providers who, at the height of the pandemic in 2020, say they engaged with patients through telemedicine.
Source: Ipsos COVID-19 HCP
In the human petri dish that was the response to Covid-19, the healthcare sector stands out as having been affected like no other. With lockdowns taking hold from the first quarter of 2020 onwards, the usual business of primary care provision had to change, and that meant the needs of sufferers of Covid-19 coming front and center.
In many countries around the world – and in an effort to prevent hospitals being overwhelmed – the result was delays to most elective procedures, or non-urgent surgeries. The same can be said for scheduled routine check-ups. In the US, doctor visits and elective procedures dropped in half on average, hitting a bottom in early May.1
“Everything from routine primary care to cancer care, and even emergency room visits for chest pain were down,” says BNY Mellon healthcare analyst Matthew Jenkin. “It’s certainly hard to know how many fatalities or worsening prognoses occurred as a result. At the time, there was a debate over what was really elective. For example, knee replacements are considered elective—but in the US we also saw heart valve replacements down in the 40% range.”
The drop in serious procedures like heart valve replacements somewhat aligned with a drop in diagnoses of cancer, heart disease and other severe diseases. The hardest hit specialities were psychiatry, gastroenterology, dermatology, and rheumatology—most likely because they were the most deferrable visits, he adds.
The future is now
Into this void of cancelled appointments, postponed check-ups and missed diagnoses stepped the relatively new phenomenon of telemedicine. Here, in place of face-to-face meetings with doctors and clinicians, patients can be diagnosed and, in some cases, treated remotely through the use of technology. “Recently, 57% of all psychiatric appointments were being conducted via telemedicine—something that can very well stick into the future,” Jenkin says. “Nearly 20% of all primary care visits today are now being done by telemedicine after peaking at 38% back in early May 2020. And this all compares to a 2% baseline trend of telemedicine before the crisis, so clearly things have changed.”
In the past, telemedicine faced numerous adoption hurdles – not only patients’ understanding of doctors’ ability to diagnose conditions remotely but also how payment might work. Yet now, in the US at least, says Jenkin, government and private players have agreed reimbursement rates. Over the long run, he believes the infrastructure will be efficient and may even result in money saved. Meanwhile, patients have become ever more comfortable with telemedicine as its use has become normalised.
Trends accelerating as a result of Covid-19:
- Remote patient monitoring
- Home care
- Genetic technologies
Real-time remote monitoring
Aside from telemedicine, another trend Jenkin is watching carefully is remote patient monitoring. This is when biosensors use a cloud-based system to transmit vital data in real-time from patients to caregivers, nurses, physicians and family members. It is currently being used for cardiac, oxygen, glucose and sleep monitoring to check vitals and monitor the progress of disease.
“We were excited about the future of biosensors before the pandemic, but now we’re seeing widespread adoption of these technologies at a faster rate to monitor diseases like heart arrhythmias and diabetes,” Jenkin says. “These technologies are reducing in-patient and in-person visits and most importantly, we think they’re going to prevent negative outcomes down the road,” he says.
And, beyond telemedicine, what of the pharmaceutical companies – particularly those that helped develop vaccines against Covid-19? Could they be in line for a windfall on the back of their endeavours? Contrary to what some may believe, it is not necessarily the manufacturers of vaccines, the pharmaceutical companies, which hold the greatest potential to profit, according to Jenkin. Global pricing per vaccine dose started in mid-2020 when a large US pharmaceutical company contracted with the US government in the US$20 per dose range.2 However, subsequent US contracts point to pricing in the US$10 range, with some even lower,3 and Jenkin estimates the cost of goods sold for each dose is probably in the US$5 to US$7 range.
“In my view, it feels like revenue expectations for the manufacturers will likely undershoot expectations dramatically,” Jenkin says.
Life sciences companies, which supply materials to manufacture the vaccines, will most likely see the real profit, he adds. With the world’s largest biomanufacturing project underway, life sciences companies are playing a large role in the production of vaccines. The price per dose they receive should be well above their costs in comparison to the pharmaceutical companies.
Concludes Jenkin: “I think life sciences companies will have the opportunity to profit during the pandemic phase of the virus, as well as if there is a seasonal recurrence like the common cold, of which 25% are believed to have been coronaviruses at one time.”
1 CNBC: Doctors worry the coronavirus is keeping patients away from US hospitals as ER visits drop: ‘Heart attacks don’t stop’. April 14, 2020.
2 NPR: Prices For COVID-19 Vaccines Are Starting to Come into Focus. August 6, 2020.
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