How to Invest in Healthcare Post Pandemic

"Explosive change is coming in our ability to diagnose, treat, and even cure many debilitating diseases. Indeed, a golden age could be dawning for patients and healthcare practitioners—and investors in pharmaceutical and biotech stocks."

So writes Barron's Lauren Rublin, introducing our latest Roundtable focused on the topic of healthcare and biotech investing. There's no shortage of innovation—and hype—in the sector today, and Roundtable members sat down recently to hash out the differences between the two, including plenty of large and small stock picks to play the most promising trends and technologies.

The panel began with a discussion of the current state of the Covid-19 pandemic and what it has meant for the healthcare industry, the drug development process, and more.

Here are a few highlights:

Covid-19 is still in the picture. How will the pandemic evolve from here?

Ziad Bakri, manager of the $20 billion, five-star-rated T. Rowe Price Health Science fund (PRHSX):

We are learning to live with the virus. As the population gains some level of immunity, we will probably see continued waves, but they will grow more moderate. Covid will go from pandemic to endemic. We will have to adapt our behaviors. Measures like mask-wearing in crowds will be normal, as it is in many countries in Asia. The world is forever changed, but we will figure out how to do in a safe way the vast majority of things that made us happy in the past.

Liisa Bayko, biotechnology analyst at Evercore ISI:

 I agree, but I’d note that the response to Covid differs by region. In Canada, where I was visiting family recently, life is very restricted. In the short term, we are fumbling our way through. There is still a debate about boosters, and we’ll be chasing variants for a while. We need a long-term vision.

What are the ramifications of Covid for the healthcare industry?

Stephen Berenson, managing partner of life-sciences investor Flagship Pioneering and Moderna board member:

We were caught with our pants down by Covid. There wasn’t an ounce of preparedness that any country in the world was able to bring to this problem. That is a big lesson for the future. There are going to be efforts and investments to help prepare companies against what could be the next pandemic.

Second, there was a tremendous amount of innovation around the regulatory process for getting Covid vaccines approved. Thoughtful people are going to look at those innovations and ask whether some should be incorporated in the future in the drug-review and approval process.

Finally, the two companies at the forefront of helping the world address the pandemic never sold a product prior to their Covid-19 vaccines. There was a tidal wave of skepticism around the ability of the BioNTech and Pfizer partnership, and Moderna, to do what they did. I hope people look at the power of innovative companies differently in the future.

Will the experience of Covid speed up the drug-approval process in the future?

Berenson:

I don’t want to make that prediction, but there have been innovations in the process that could be made permanent and enable approvals of safe and efficacious medicines that get to patients faster.

Chris Schott, healthcare analyst at J.P. Morgan:

I agree with Stephen on regulatory innovation. There is a debate occurring about whether the Food and Drug Administration has become less predictable. We have seen industry and regulatory agencies come together in an area like Covid, where there is huge unmet need, to think about best practices and unique paths to market. Hopefully, that can be applied more broadly in the future.

Read much more from the healthcare Roundtable's lively discussion and see members' stock picks here.