Genomic engineering is the manipulation of an organism’s genes by introducing, eliminating or rearranging specific genes using the methods of modern molecular biology. The technology will enable the analysis of patients’ DNA, and the diagnosis and treatment of diseases. And what’s good for patients can also be interesting for investors.
- In genome engineering, new applications will analyse the DNA of patients, diagnose and treat diseases
- They will likely also develop drugs that are tailored to individuals. Experts refer to this as precision medicine
- Virtual assistants and chatbots look set to support doctors by providing advice on medications and therapies.
It may sound like science fiction, yet it could soon be reality. There are three factors in particular that support this:
- Firstly, people are living longer and need more medical help and care
- Secondly, the development of new treatments is accelerating – never before did scientists react so quickly to a new pathogen as they did to Covid-19 and never before were they able to provide a vaccine in such a short time
- Thirdly, we are currently experiencing technological innovations that are taking healthcare to the next level: artificial intelligence (AI), networking, 3D printing.
AI as a springboard for R&D and new drugs
Generative AI enables pharmaceutical companies to improve their research and development as they can process and evaluate large amounts of data more quickly. This is a prerequisite for training the medical algorithms used to operate chatbots. Together with medical technology, AI should lead to preventive and personalised medicine.
A defining element of the healthcare of the future will be the close integration of software and hardware. There will be portable and stationary medical devices connected via the internet. There will no longer only be remote consultations, but also holistic remote care and treatment of patients in their homes.
Parts of patient care can also be provided remotely. A virtual infirmary serves as a central location and a hub for medical professionals to communicate with patients.
Not only are manufacturers of AI chips and software houses becoming increasingly important for healthcare, but so are the producers of medical technology. They provide the equipment and services used to collect, analyse, and transmit patient data. Such med-tech companies will increasingly develop into service providers for selected patient groups.
Production processes such as 3D printing will increasingly find their way into the healthcare sector. It can be used to manufacture tools and equipment as needed, including surgical instruments, orthopaedic or dental implants, and dentures.
Research is already underway into whether 3D-printed organs with biological tissue from the patient’s body can be used for transplants. If possible, it could address the shortage of donor organs and drastically reduce costs.
Another driver for med-tech growth
The market for medical technology is growing. According to Statista, sales are forecast to reach USD 610 billion worldwide in 2024 and are expected to increase by more than 5% a year over the next few years.
Currently, the largest market for medical technology is the US. Statista estimates that revenues could total USD 216 billion in 2024. Germany is up and coming: total turnover of medical technology manufacturers rose by 5.5% to EUR 38.4 billion in 2022, according to MedTech Europe data cited by Germany Trade & Invest, the economic development agency of Germany.
One challenge for investors is the diversity of medical tech sectors. They range from biotechnology and life sciences to medical instruments & devices and health technology.
Investing passively in medical technology
For investors seeking exposure on a passive basis, the ECPI Global ESG Medical Tech index is an equally weighted benchmark designed to offer exposure to 50 companies with the highest ESG score in the medical technology sectors.
The companies selected for the index can be assigned to one of these sub-clusters:
- Biotechnology: Companies active in genomic science such as gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, precision and regenerative medicine
- Life sciences tools & services: Companies involved in the drug discovery, development and production by providing analytical tools, instruments, consumables and supplies, clinical trial services, and contract research services
- Healthcare equipment & suppliers: Manufacturers of health care equipment and devices including medical instruments, drug delivery systems, cardiovascular and orthopedic devices, diagnostic equipment, eye care products, hospital supplies, and safety needle and syringe devices
- Healthcare technology: Companies active in telemedicine and digital health, healthcare analytics, connected healthcare devices, robotics, artificial intelligence-based solutions, administrative digitisation, sensors, and wearable technologies.
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