Forbes’ article takes a closer look at investing in healthcare, click here to read it in full.

  • How has the healthcare sector performed?

Liz Klein, investment director at Calculus, highlights financing as a constraint to the recent performance of the sector: “The listed markets have faced challenges with relatively poor returns and few initial public offerings. 

“In contrast, the private markets have experienced success as companies have been raising funds privately rather than going public. Larger venture capitalists have not been exiting investments due to this trend thus the cycle of cash has been hampered.”

  • Why invest in healthcare?

Ms Klein: “People are living longer but are not necessarily healthier in old age. This has led to an increase in diseases of ageing which require solutions. 

“Governments are also unable to manage healthcare in the same traditional way, creating a requirement for advancements in healthcare, disease management and digital innovation. These trends present significant investment opportunities.”

  • What are the risks of investing in healthcare?

Ms Klein says: “Healthcare investments involve inherent risks and long timeframes. Only around 10% of drugs that begin clinical development make it to market, and the average time to bring a drug to market is 15 years.”

  • What are the options for investing in healthcare?

Calculus’ Liz Klein points to UK small-cap Scancell as an interesting option: “Scancell recently achieved a significant milestone by validating its cancer vaccine platforms. 

“They are conducting a trial to assess the effectiveness of their ImmunoBody DNA cancer vaccine in combination with standard-of-care checkpoint inhibitors [a type of immunotherapy] in patients with advanced unresectable [non surgically-removable] melanoma. Recently the company delivered early but very encouraging data.”

Ms Klein also highlights Spectral AI, a US small-cap company that offers artificial intelligence-based medical diagnostic services. She comments: “Spectral AI has been awarded a contract valued at up to $149 million by BARDA (Biomedical Advanced Research and Development Authority). 

“This is a multi-year award and it places up to 30 DeepView devices at various burn centres and emergency rooms to support the study. This will enable Spectral AI to conduct health economic and outcome research to support broader clinical adoption of the DeepView System.”

  • What’s the outlook for investing in healthcare?

Calculus’ Liz Klein says: “The outlook for the healthcare sector is promising. There is a growing trend of increased investment by large corporations and a surge in mergers and acquisitions (M&A) involving innovative healthcare companies. 

“This influx of investment and M&A activity is expected to drive growth in the healthcare sector for the next five years. Notably, the positive impacts of substantial investments in dementia-related research are starting to manifest, further contributing to the sector’s positive outlook.”