Meret Gaugler recently joined Endeavour Vision from the Swiss private bank, Lombard Odier, where she was focused on healthcare within thematic and Swiss equity portfolios for almost a decade. In this interview, she talks about what brought her to the role and why healthcare is such a unique investment sector.
As a passionate healthcare investor, what is it about the sector that makes it uniquely attractive to you?
Nothing drives innovation like acute need – especially when it comes to our health. Whether that is in the long term to better manage increasingly prevalent chronic conditions, or in the short term to tackle a novel virus. With well-being such an indisputable priority, advances in healthcare are generally supported, rewarded and protected. This has led to steady reinvention and a sector that stands out in channelling structural trends and innovation into above-average growth.
To top it off, this innovation and growth are worth more to investors in today’s world of structurally low economic growth. While low growth has been the new normal for the past decade, the slump has been reinforced by the current health crisis, from which a full recovery will realistically take years. When economies are struggling to grow significantly even at the top of the cycle, investors are more willing to pay sustainably higher prices for businesses that put up attractive growth regardless of the broader economy.
Within healthcare, medtech carves out a special niche in that it has gone through growing pains on regulations and pricing with a decade’s head start on other segments like biopharma. And, like growth, lower risk is rewarded with a higher price tag.
How do you see healthcare evolving as a consequence of COVID-19?
COVID-19 has had a profound effect on the lives of people around the world, pushing healthcare systems and industries into the limelight. From the outset, the pandemic exposed a lack of preparedness in regions less used to wide-spread infectious disease. So, now, we’re likely to see Western healthcare systems responding with organisational changes and implementing lessons learned from the many Asian hospitals that coped better at the height of crisis.
While huge amounts of money have been spent this year on balancing the economic impact of lockdown measures, it is by no means a given that governments will have the freedom to do so again in the future in response to other potential health threats. Ensuring that healthcare businesses that pitched in to overcome the current crisis are paid adequately for their efforts is therefore imperative to ensure sustained investment and preparedness.
That said, while COVID-19 has likely increased healthcare budgets, we cannot afford to think of the sector as being detached from the overall economy. This is why it is crucial that healthcare investors show discipline in measuring innovation not only in medical advancement, but also the ability of a new procedure, treatment or service to alleviate the overall cost burden.
How will this evolution impact opportunities in medtech and digital health?
COVID-19 has reinforced the role of medicine in our everyday lives, while it has simultaneously hampered access to care. In the same way that lockdowns sped up the movement toward online shopping and working from home, the pandemic accelerated shifts in healthcare that began long before the crisis took hold. Keeping the length of a hospital stay to a minimum, monitoring patients in their homes or delivering care remotely are just a few examples of how broader digitalisation of the sector holds the promise to improve access and outcomes while at the same time reducing cost. For disciplined investors carefully identifying businesses with solid barriers to entry, this trend offers many exciting medium-term opportunities.
How does your experience in public and thematic investments prepare your for your new role at Endeavour Vision?
I think of healthcare as a sector that is intricately entwined across the continuum – from early-stage to mature and from private to public. With disruption often only a blink away, larger companies cannot afford to take their eye off what is happening in smaller ones. Similarly, with public markets more receptive to earlier-stage entrants than ever before, private-equity investors and the companies they invest in can benefit from a clear view on public-exit opportunities and what it takes to manage an IPO successfully.
Managing public equities in healthcare is not the only experience that brought me to this role. The sector is highly technical and analysing companies in the space for both opportunity and risk can prove challenging without a solid specialist background. A decade in academia nurtured my passion for science, taught me humility in the face of complexity, and helped me see that turning discovery into tangible ways to help people live longer, healthier and more fulfilled lives is no easy feat. Allocating capital efficiently to allow the ventures that can make the most difference to get a fighting shot really closes the loop.