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MARKET OUTLOOK - Healthcare, Pharma & Biotech, Perspectives & General Market Feeling
nipper
post Posted: Apr 5 2019, 07:49 PM
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QUOTE
Shorten’s $2.3 billion Medicare plan has boosted Australia’s imaging and diagnostic companies, with share prices rising on the back of his funding commitment.

The Labor leader last night revealed healthcare will be the centre of his election campaign, with cancer treatment the focus of his Medicare plan.

The plan includes a $600 million investment to expand access to MRI machines and boost Medicare rebates for diagnostic imagining.

Integral Diagnostics was up almost 7 per cent on the Labor promise, while Capitol Health rose 4.5 per cent at 23c. Healius was up over one per cent at $2.89.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
triage
post Posted: Jan 21 2019, 10:49 AM
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In Reply To: nipper's post @ Jan 21 2019, 06:51 AM

Sounds a bit like buying a lottery ticket: you know someone is going to make a killing from the venture but what numbers do you need for that someone to be you. (like the car industry in the US in the early 20th century - there were hundreds of start-ups but only a handful came through).



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

Said 'Thanks' for this post: nipper  mullokintyre  
 
nipper
post Posted: Jan 21 2019, 06:51 AM
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QUOTE
A new generation of healthcare providers, including international technology and retail giants, is expected to ramp up competition in Australia this year, as the digital health sector matures.

It comes as the aged care royal commission, which kicked off last Friday, shines a light on health carer shortfalls, poor record keeping and a lack of support for medical staff — problems digital technologies are designed to address.

But investors and industry insiders have warned Australian digital health companies are being forced offshore by red tape and anachronistic regulation, meaning local patients cannot reap the full rewards of the industry’s know-how, even as the value of the global market soars towards $US200 billion ($280bn).

Chris Nave, managing director of Brandon Capital — Australia’s largest healthcare investor — said it was certain that technology and data would be the mainstay of healthcare and patient management in five to 10 years’ time. “As an investor, the unknown is trying to work out where the opportunities are to support innovation that truly does change patients’ lives and generates an investment return,” Mr Nave said. "I think we are all still trying to figure that out and no one has cracked the code yet, including in the US. I think it will be an important space and it would be a foolish healthcare investor not to take the sector seriously and to try to find opportunities to invest in.”

The digital health market is expected to reach $US206bn globally by 2020, driven mainly by the mobile and wireless health market, and the Asia-Pacific is tipped to become a key region. In his top predictions for the health sector for 2019, Shane Evans, head of Minter Ellison’s national health industry group, said that the technology giants were set to lead disruption. He said a new wave of care providers, including international technology and retail giants, would enter the market and compete at a more sophisticated level.

But despite plenty of activity in Australia from start-ups in digital health, investment and regulation in the space is not keeping pace and a wide-ranging report has argued for increased support to help the industry grow. The report, Digital Health: Creating a New Growth Industry for Australia, also argues that the sector is not attracting the venture capital it needs in Australia.

It says one reason is that Australia is proportionately well behind other nations investing in this area. “Many digital health start-ups are departing Australia and moving directly into investment-readiness programs in major markets due to the perceived lack of capital for digital health companies,” the report warned. The new report, released by digital health business accelerator ANDHealth, revealed that the September quarter in 2018 saw more funding pour into digital health than any previous quarter on record, with funding exceeding $US4.5bn globally.

“The opportunity for Australia to capture significant investment, become a destination for inbound digital health research and development, alongside becoming a world-leading exporter of digital health products, is significant,” the report concludes.

Digital health represents a technological change that covers every aspect of the healthcare paradigm from prevention to diagnosis, management and treatment. It is also transforming the way frontline healthcare services are created, delivered and measured. There are five main areas of digital health: telehealth, medical records, patient management, mobile health and connected devices.

ANDHealth chief executive Bronwyn Le Grice said that for Australia to succeed in digital health, there needed to be widespread understanding that the sector went beyond health information technology and infrastructure, and that digital health was not a subset of the medical devices sector.

“It encompasses much more than health software and electronic medical records and has greater economic impact potential than medical technology alone,” the ANDHealth report outlines.

Brandon Capital’s Mr Nave said Australia’s digital health sector was in its infancy. He said a lot of people were talking a big game around digital health, with lots of noise and activity. Brandon Capital is seeing about two digital health businesses a week. “We are seeing bright, enthusiastic teams with interesting ideas but no real understanding about implementation in the healthcare setting,” he said.

Mr Nave said for him as an investor to be attracted to a digital health company or product, it had to improve patient outcomes, provide information that changed a doctor’s treatment decision or lower the cost of healthcare. [He] added that one of the fundamental challenges for the emerging sector was getting paid. Government and insurer systems were not set up to reimburse for the use of these new innovations.

The ANDHealth-commissioned report raises concerns about historic reimbursement frameworks and regulatory guidelines not being originally set up to mould to new emerging technologies.

“Across many sectors, including healthcare, existing regulation often fails to keep pace with new technologies, leading to regulatory grey areas and limiting the rate at which the digital health sector can deliver transformative solutions,” the report said. “Feedback from Australian digital health entrepreneurs suggests it is easier to access customers and sell their products and services overseas than in Australia, due to perceived regulatory, reimbursement and market implementation barriers.”

Healthcare is seen as one of the last remaining major industries to be significantly disrupted by advanced technology but it is certain that such disruption will happen at some stage in the future.

Minter Ellison’s Mr Evans said the emergence of digital healthcare solutions was a key sector driver.

“We are on the cusp of a new frontier in the healthcare sector as digital service delivery to patients and care recipients becomes a much bigger day-to-day reality,” he said. “In healthcare, the customer is increasingly in charge, demanding personalised, convenient care. They want the doctor, or even the healthcare provider, in their home, and they can because technology is an enabler.”

https://www.theaustralian.com.au/business/t...44eb5b1feec8359

((as a footnote; Brandon Capital work in lifesciences area, hardly the full range of healthcare. http://www.brandoncapital.com.au/ ))



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  triage  
 
nipper
post Posted: May 22 2018, 08:53 PM
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AI will expand the work of radiologists, not replace them
QUOTE
Recent advances in artificial intelligence have led to speculation AI might replace human radio­logists one day. Researchers have ­developed deep learning neural networks that can identify pathologies in radiological images such as bone fractures and potentially cancerous lesions, in some cases more reliably than an average radiologist. For the most part, though, the best AI systems are on par with human performance and are used only in research settings.

That said, deep learning is rapidly advancing, and it is a much better technology than previous approaches to medical image analysis. This portends a future in which AI plays an important role in radiology. What does this mean for radiologists? We’re confident most radiologists will continue to have jobs in the decades to come — jobs that will be ­altered and ­enhanced by AI. We see several reasons radiologists won’t disappear from the labour force.

First, radiologists do more than read and interpret images. Like other AI systems, radiology AI systems perform single tasks. For example, the deep learning models we previously mentioned are trained for image recognition, such as detecting a nodule on a chest CAT scan or a haemorrhage on a brain MRI. But thousands of such recognition tasks are necessary to identify all potential findings in medical images, and only a few of these can be done by AI today. Furthermore, image inter­pretation represents just one set of tasks that radiologists perform.

Radiologists also consult with other physicians, treat diseases, perform image-guided medical ­interventions, relate findings to other medical records and discuss procedures with patients, among other activities. Even if AI were to take over image reading, most ­radiologists would turn their focus to these other essential activities.

Second, clinical processes for employing AI-based image work are a long way from being ready for daily use. Even among deep learning-based nodule detectors that are approved by the US Food and Drug Administration, there were different priorities: the probability of a lesion, the chances of cancer, a nodule’s location. These distinct focuses make it very difficult to embed deep learning systems into current clinical practice.

Third, deep learning algorithms for image recognition must be trained on “labelled data”. In radiology, this means images from patients who have received a ­definitive diagnosis of cancer, a broken bone or other illness. In other types of image recognition where deep learning has achieved success, AI has been trained on millions of labelled images, such as cat photos on the internet. But there is no aggregated repository of radiology images. They are owned by vendors, physicians and patients, and collecting enough data for AI training will be challenging and time-consuming.

Finally, changes will be ­required in medical regulation and health insurance for auto­mated image analysis to take off. Who’s responsible, for example, if a machine misdiagnoses a cancer case — the physician, the hospital, the imaging technology vendor or the data scientist who created the algorithm? And how will healthcare payers reimburse an AI diagnosis? All these issues need to be worked out, and it’s unlikely that they will see fast progress. AI radiology machines may need to ­become substantially better than human radiologists — not just as good — to drive regulatory and health insurance changes.
Harvard Business Review

Thomas H. Davenport is the president’s distinguished professor in management and information technology at Babson College. Keith J. Dreyer is vice-chairman of radiology and chief data science officer at Massachusetts General Hospital.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
triage
post Posted: May 5 2018, 11:55 AM
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In Reply To: nipper's post @ Mar 18 2018, 03:59 PM

Thanks nip, you seem to have a good handle on the sector.

Here's an article that I came across via the marginal revolution blogsite.

I have had a few goes at getting an idea about if and where to put money into the health sector but it still feels like playing pin the tail on the donkey. The demographics, the wealth affect in an aging China, the rapid progress in computers and AI, etc all suggest the sector should show growth and profits but on the other hand the ballooning costs suggest that plenty in the sector will crash and burn.

Going on the analysis presented in this article regarding the pharmaceutical sector, it looks like for the time being that the costs are winning. Sure if you pick the right racehorse you can win the Melbourne Cup, but this study suggests that for most operators in the sectors their destination is the glue factory.

Actually I'll give you the link to the marginal revolution post and you can click on the link there to get to the article.

https://marginalrevolution.com/marginalrevo...urn-pharma.html



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
nipper
post Posted: Mar 18 2018, 03:59 PM
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Posts: 5,395
Thanks: 1960


In Reply To: alonso's post @ Mar 18 2018, 01:11 PM

Glad your personal experience was satisfactory, alonso, & good question

- one possible part: it used to be the 'heavy hand of regulation' over pathology, but that is considerably smaller with Aust business sold off (in 2015, Healthscope sold the Australian component of Healthscope Pathology, including Gribbles, to Crescent Capital Partners) and " International Pathology operations across New Zealand, Malaysia, Singapore and Vietnam" remaining.

- also, coming out of PE in 2014, some suspicions linger as to the true state of the biz ('capital starved', 'run into ground' come to mind for other freshly minted IPOs)

So, and since September 2017, when it sold Healthscope Medical Centres, HSO is left with Hospitals and Independent Services, plus the international pathology - which I suspect could be offloaded if suitable price agreed to?

The Independent Services mandate defined as specialist provider of unique accommodation, attendant care and in-home services to individuals with acquired brain injuries, disabilities, complex conditions and those who have left hospital and require additional support at home.

Another interesting play in a similar space that is emerging is Zenitas Health (ZNT) .... a community-based healthcare provider specialising in the provision of in-home and in-clinic care solutions to reduce the reliance on high-cost acute and post-acute institutional care. Zenitas operates in the following three segments of the community-based healthcare industry – primary, allied and home care.

With the pressure on hospital costs so apparent, and the government anxious to keep a lid on the health budget, I think this sector has the most growth prospects (if the implementation is done efficiently)





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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alonso
post Posted: Mar 18 2018, 01:11 PM
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What do you guys think about the future of Healthscope?
I only have personal experience of one of their hospitals, which I found to be justas good as Ramsay.
I just can't understand why it is such a Cinderella.



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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith
 
nipper
post Posted: Mar 14 2018, 09:19 PM
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QUOTE
The fortunes of two of the ASX's largest healthcare names diverged markedly during the reporting season just finished. Before it reported CSL Ltd (CSL) was trading on 29 times fiscal 2019 earnings; now the multiple is 32 times. Ramsay Health Care (RHC) in contrast used to trade on 22.5 times but now the multiple is 21 times. CSL's result and guidance beat expectations while the composition of Ramsay's result disappointed, though the guidance was reiterated.

Many earnings results meet market expectations (so-called consensus) but the size of the share price moves when stocks please and disappoint, relative to consensus, leaves many investors wondering what has changed, if their original investment thesis for holding a stock is still valid — and whether the stock is now overvalued or undervalued.

This is the approach I take to earnings results and subsequent share price moves. The cost base for the original investment is not relevant; to focus on this as a reason for buying, holding or selling is what they call "anchoring bias".

In reality the only question about a stock is whether it can achieve the investor's return target from the current share price and how much risk there is to this.

CSL's result, dividend and guidance surprised above consensus expectations, which goes to the power of this business model and the staff and management team led by Paul Perreault. There is also the R&D program, CSL's market leadership and the growth available in its end markets.

Net earnings at CSL surged 35 per cent, the interim dividend was increased 23 per cent and guidance for fiscal 2018 earnings was raised to ($US1.55 billion to $US1.6bn ($1.97bn-$2.03bn), up 4 per cent at the midpoint. Reported revenue was up 11 per cent but constant currency revenue jumped 31 per cent, indicating strong profit margin expansion.

Today CSL — the one-time Commonwealth Serum Laboratories — describes itself as a "global speciality biotechnology company": The reasons for its superb performance are now well-understood by the market. In IG (immunoglobulins) CSL extended its competitive advantage by investing in a larger plasma collections network than competitors, so it could meet constant growth in patient demand for IG while improving per litre profitability.

Even after the upgrade, CSL's guidance is still too conservative because it implies a second-half loss for Seqirus whereas a positive contribution is more probable. This the market also understands: consensus earnings for fiscal 2018 are $US1.635bn, above the top end of the guidance range, and the super-premium earnings multiple implies certainty CSL will upgrade.

It also means the stock is priced for perfection, so any disappointment would trigger a substantial pullback. We can value the stock at $174 a year from now; a rally to this level today would be difficult to justify. It is currently trading around $163.

Ramsay Health Care held its guidance for 8-10 per cent growth in fiscal 2018 "core" earnings per share, but the interim result was at the low end of the range (7.8 per cent) and the composition and dividend disappointed, that's why we saw a derating in the market.

Ramsay only reached the low end of its guidance range due to lower interest expense and France's corporate tax cut. British and French revenue and earnings went backwards as guided, but the scale of the falls was worse than consensus expected due to pricing constraints and volume pressures. To sustain French earnings Ramsay has had to find cost savings in a new back office centralisation program but this came at the cost of a restructuring provision nearly five times the recurring annual cost savings. The earnings pressure in Europe put more pressure on the Australian operations to prop up the group result, so management had to pull hard on costs.

My impression is the British and French governments are gaming private hospital operators by promising higher outsourced volumes in return for tariff (reimbursement rate per procedure) cuts, but the volume growth is ­either slow (France) or keeps getting pushed out into the future (Britain), where the NHS is adding to waiting lists to deal with its underfunding). The attractive demographic story of rising demand for healthcare due to ageing population is diluted by how governments manage the high cost of funding healthcare. Ramsay is finding cost efficiencies to support earnings but the market wants ­organic revenue growth. British tariffs will increase this year, providing some relief.

In Australia, growing private hospital admissions by over-65s are partly offset by the withdrawal of young people from private health insurance, while slow wages growth and cost pressures on household disposable income have pushed some patients to defer elective surgery.

Ramsay continues to grow faster than the market in Australia due to its superior hospital portfolio and appeal to doctors. There is no doubt ageing population will drive higher demand for hospital services; the question is whether the stock can return to former rates of growth of 12 per cent or better when Britain improves, but France will remain a grind. The current global procurement cost savings program is going well but will cease supporting earnings growth after it ends in fiscal 2019.

Ramsay's sustainable annual growth rate is rebasing lower to 8 per cent and the stock is worth $66.50 a year from now (it is currently trading around $64). A rally towards $70 could therefore be an opportunity to consider other stocks with growth and undervaluation. Ramsay still trades at a premium to the market because there are few other large-caps able to compound earnings at high ­single-digit rates.
David Walker is ASX large-caps portfolio manager at Clime Asset Management.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Nov 15 2017, 08:09 AM
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Joe Lonsdale has a $US2 billion venture capital fund, 8VC and is a co-founder of multibillion dollar software firm Palantir; he is heading to Australia to present at the Sohn Hearts and Minds charity conference.

........ he says the hottest thing in Silicon Valley now is in the biosciences and that
QUOTE
8VC has become solely focused on the biosciences because that's where there will be the really big venture investment wins.

"In our opinion one of the very biggest changes in the last five years is a lot of the biological sciences have turned into information problems," he says. "There's a lot of new breakthroughs. Sequencing has become very cheap, writing DNA has become very cheap and gene editing has become really accurate and inexpensive."

Lonsdale says tools such as CRISPR, which is a genetic engineering technique, have triggered huge breakthroughs because they allow scientists to accurately edit genes.

"One way to think about it is that for the most of the last few billion years on Earth, the main battles have been between bacteria and bacteriophages or viruses that attack bacteria," he says.

"So, there's all this evolution that happened at that level in that battle. "The most important evolution in the kind of weapons of war for bacteria were the catenin protein along with this strand of RNA to go and look for viruses that match.

"What it does is allow you to go and edit genes. This is a really big breakthrough in the scientific community. It's being used by hundreds ... of institutions now to research and test and explore. "All these new tools and the whole new set of sequencing has allowed a whole set of things to come about."

The emerging areas in biosciences include microbiome, synthetic biology, genomics IT, microfluidics and epigenetics.

Lonsdale's company has invested in half a dozen companies which he refers to as the new wave of bio-IT. The companies he has invested in include Senit Biosciences, Color Genomics and Bolt Threads.

Bolt Threads is a synthetic biology materials company that has developed a means of brewing spider silk and other fibres found in nature sustainably on a large scale. Lonsdale is fascinated by the process of making spider silk in large quantities by taking the gene from the spider and putting it in something that can produce the same protein.

"It turns out the most effective way to do this is with baker's yeast," he says. "It turns out baker's yeast is very useful for all sorts of synthetic biology. "You basically are cutting a DNA out or taking a DNA strand out and you're putting it into the yeast in the right spot to get it to produce a lot of these proteins. "So you're basically brewing spider silk. You have a big giant vat and you're brewing with yeast and you're getting these proteins to fall to the bottom."
AFR



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Nov 10 2017, 04:31 PM
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In Reply To: triage's post @ Nov 10 2017, 04:01 PM

yep, saw that & looked it up to confirm (wasn't going to clutter/ splutter ). Careless journalism or impressionable neophyte ... & makes me wary of the rest of the story.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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