Healthcare in the time of Covid-19

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October 22, 2020

The US healthcare landscape has transformed. Covid-19 has wrought permanent change. Mellon healthcare analysts Amanda Birdsey-Benson and Matthew Jenkin discuss what this means for the healthcare sector and the companies within it.

The pieces on the board, from vaccine manufacturers to telemedicine innovators, are in different positions than they were prior to the onset of the pandemic, according to Mellon healthcare analysts Amanda Birdsey-Benson and Matthew Jenkin.

Health experts have learned a lot since the millions of cases of Covid-19 infiltrated the US.1 Most importantly, they have learned how to better treat those who are diagnosed with the virus. At least that is what the data appears to show, according to biotech analyst Birdsey-Benson.

Regarding daily new cases and deaths from March through September, the first peak in both charts represents the initial spread of the virus in coastal states like New York and California, while the second peak is largely indicative of the summer surge in southern states like Florida.

The chart on the right, which indicates daily deaths, shows the first peak to be higher than the second. The chart on the left, which indicates daily new cases, shows the first peak of cases to be lower than the second peak, giving the impression that something upset the correlation between cases and deaths over time, according to Benson.

“This would suggest we missed a significant number of cases in the beginning because testing capacity was so low earlier in the year or our doctors have improved their treatment of Covid,” she says. “For example, we now know the steroid dexamethasone can cut mortality rates by up to 30% in intubated patients2 or that flipping the patient to a prone position can lower mortality rates when they are in respiratory distress.”

Doctors have also identified the most vulnerable demographics as those with certain comorbidities – underlying or pre-existing conditions - and those over a certain age. However, many questions remain. For instance, there is still insufficient data on reinfection to make clear predictions about post-recovery protection or the longevity of immunity.3

All eyes are on the development of a vaccine that can be rolled out for widespread distribution, according to Benson. She notes it has been quite unique to see so many scientists and doctors across the globe working toward the same goal. There are currently more than 200 vaccines in development using several different platforms of vaccination.4 Some administer a weakened strain of the virus that has the ability to build up the body’s T-cell and antibody responses without replicating as quickly as the real virus, which makes it more manageable for a natural immune response. Other vaccines in development utilize a protein-based approach, which uses the spike protein from the surface of the virus to induce neutralizing antibodies to block the virus from healthy cells. Perhaps one of the most interesting methods, according to Benson, is the mRNA approach, or gene therapy technique, which she says is currently being used by two advanced vaccine producers in the US.

She adds: “It’s a new platform that was enabled by our newfound capabilities in genetic technology. For the past decade we have taken all the information we have learned from the human genome project and rapidly deduced how to use this information for developing drugs, which is definitely helping us expedite the search for a vaccine candidate.”

In the race to get a vaccine, Benson says having this variety of approaches is helpful. “If one of the vaccines turns out to be unsafe or simply does not work, we have the ability to pivot to a different platform,” Benson says. “We are truly at a remarkable time right now.”

Profit potential?

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 Matthew Jenkin, senior research analyst at Mellon. Global pricing per vaccine dose started a few months ago when a large US pharmaceutical company contracted with the US government in the US$20 per dose range.5 However, subsequent US contracts point to pricing in the US$10 range, with some even lower,6 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. “Particularly, if there is more than a dozen or so approved by the broad availability phase, which is projected to be sometime in the middle of next year and solely on lower-thanexpected price.”

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 that they receive should be well above their costs in comparison to the pharmaceutical companies, according to 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.”

All these developments aside and apart from the headlines the hunt for a viable vaccine creates, there has been a broader Covid-induced transformation taking place in the healthcare industry.

Out of practice

When the pandemic began to tighten its grip on the US at the end of March, most elective procedures, or non-urgent surgeries, were delayed. This was to ensure health facilities had ample capacity to handle Covid-19 patients. The same can be said for scheduled routine check-ups. Doctor visits and elective procedures dropped in half on average, hitting a bottom in early May.7

“Everything from routine primary care to cancer care, and even emergency room visits for chest pain were down. It’s certainly hard to know how many fatalities or worsening prognoses occurred as a result,” Jenkin says. “At the time, there was a debate over what was really elective. For example, knee replacements are considered elective—but 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. Even now, there is a chance some ailments are still underdiagnosed because people are not entirely comfortable with returning to doctors’ offices, he says.

According to Jenkin, the average medical practice was down 48% in late April but that has since rebounded to 85% versus the year before. The hardest hit specialties were psychiatry, gastroenterology, dermatology, and rheumatology—most likely because they were the most deferrable visits, he adds. The good news is every discipline is beginning to recover due in part to the acceleration of telemedicine, he says.

The future is now

“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. And this all compares to a 2% base-line trend of telemedicine before the crisis, so clearly things have changed.”

In the past, telemedicine adoption faced hurdles of both reimbursement and comfortability surrounding diagnostic capability over the phone. As doctors and patients have been forced to rely on telemedicine as of late, many are becoming increasingly comfortable with it. Now, there are set reimbursement rates agreed upon by both government and private players, Jenkin says. Over the long run, he believes the infrastructure will be efficient and may even result in money saved.

Jenkin says he and other healthcare analysts at Mellon see telemedicine as an important healthcare trend. He believes developments and population acceptance of this technology could result in lower costs for the same quality of care.

Trends accelerating as a result of Covid-19:

  • Telemedicine
  • Remote patient monitoring
  • Home care
  • Genetic technologies

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 are 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 are going to prevent negative outcomes down the road,” he concludes.


1 New York Times. Accessed October 14, 2020.

2 American Association of Hematology: Dexamethasone Lowers Death Rate Among Ventilated COVID-19 Patients. June 26, 2020.

3 The Lancet infectious disease: Genomic evidence for reinfection with SARS-CoV-2: a case study. October 12, 2020.

4 CDC: ACIP Covid-19 Vaccines Work Group. September 22, 2020.

5 NPR: Prices For COVID-19 Vaccines Are Starting to Come into Focus. August 6, 2020.

6 Ibid

7 CNBC: Doctors worry the coronavirus is keeping patients away from US hospitals as ER visits drop: ‘Heart attacks don’t stop’. April 14, 2020.


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