Healthcare Innovation Monthly Report | June
- Biological Engineering (Biotech) has boosted WELL’s performance - in the fight to combat COVID-19.
- Many WELL holdings are at the forefront of vaccine research, supplying PPE materials and producing ventilators.
- Innovative healthcare firms are benefiting from immediate healthcare changes (wearables, telemedicine, devices etc.)
Performance Review
HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) recorded another excellent month of performance – gaining 9.4% for May, after posting a 12% return in April.
For the year 2020 it is up 6.06%, while over the past 12 months it has returned 25.3%. During May the leading subtheme contributors to the gains have been in Biological Engineering, Medical Devices, Neuroscience, Robotics and Genome Sequencing. (See Table) Medical Devices in particular had a very good May recovering almost all prior year losses.
For the 2020 year, Biologicial Engineering with its Biotech focus has dominated the subtheme performance, followed by Genome Sequencing, Neuroscience and Healthcare Trackers.
It is clear increased demand for remote healthcare (Telemedicine, Robotics, Wearables) and biotech/gene therapies - has played a key role in WELL’s stock portfolio gains.
During May WELL’s positive performance led it to significantly outperforming the MSCI World Health industry benchmark (see below). Leading contributors were Regeneron (16.5% gain), Dexcom (12.9%), West Pharma (14.2%), BioMarin (15.8%). Quidel (25.9%), Illumina (13.8%) and Livongo Health (49.8%).
During 2020, many of these same holdings have been the largest underlying contributors to performance. For the year to date period, WELL’s leading contributors were as follows:
Regeneron (64.1%), DexCom (72.5%), West Pharma (42.4%), Quidel Corp (134.0%), Livongo Health (137.6%), Seegene (253.7%) and bioMerieux SA (60.1%).
May
YTD* ####
12 Month
9.38% 6.06% 25.28%
Past performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*YTD figures based on 01.01.20 - 31.05.20
| #### Sub-theme Performance | #### YTD | #### May |
|---|---|---|
| Biological Engineering | 5.35% | 2.92% |
| Healthcare Tracker | 0.39% | 0.13% |
| Neuroscience | 0.57% | 0.56% |
| Nanotechnology | 0.00% | 0.00% |
| Bioinformatics | -0.03% | 0.00% |
| Genome Sequencing | 0.58% | 0.70% |
| Robotics | -0.13% | 0.62% |
| Medical Devices | -0.50% | 4.04% |
| YTD Performance | 6.1% | |
| May Performance | 9.4% |
Past performance is no guarantee of future performance Source: INDXX. Data as of 29/05/20
WELL vs MSCI World Health Index YTD (01.01.20 - 30.05.20)
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HAN-GINS Indxx Healthcare Innovation UCITS ETF 2020 Performance – YTD (04.04.19 - 29.05.20)
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Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: INDXX. Data as of 29/05/20
Constituent News
Currently WELL has 103 constituents, with the US country weighting dominating at 84%. There exist eight underlying subthemes, led by Medical Devices (55%), Biological Engineering (27%) and Neuroscience (8%). This is followed by Healthcare Trackers, Gene sequencing and Robotics.
Continued adoption of WELL products in the fight against the novel Coronavirus, has helped ensure good performance. The pandemic has exposed many flaws in the US healthcare system. It highlights the benefits of streamlined regulation and innovation in areas such as telemedicine and digital health technologies.
Tech companies will play a bigger role in meeting the need for greater transparency of data and individual electronic health records. Trends to watch include accelerated development of the Individual Patient Record, as health-care companies build data registries. Also the use of wearables and other consumer-facing technology may increase post-pandemic, integrating data from these devices with individual medical records. WELL is positioned to benefit from these trends. Not surprisingly it’s now up 25.3% over the past 12 months.
Positive Impact on WELL:
Telehealth / Virtual care – Companies providing virtual services are becoming the standard of care in this environment as providers are limiting in-person visits to acute, emergent cases.
Home health – Companies providing in-home care have seen volume increase as self-quarantine becomes more pervasive across the country and the globe.
Medical device and product manufacturers – supply constraints are providing a boon to medical device and product manufacturers, particularly those focused on ppe & devices related to the pandemic (e.g., gloves, masks, respirators).
Prior to COVID - usage of telehealth services was estimated to be in the single digits in the US - largely in the areas of mental health. But according to a survey from IMS Health (US healthcare data provider) - telehealth services used by clinicians surged past 50% in April.
Source: https://www.morganstanley.com/ideas/coronavirus-us-healthcare-trends
- US Government Medicare insurance (reimbursement) rules have already broadened to include various telehealth services. This ensures Medicare insurance will pay for virtual care now. Post-COVID, analysts expect hospitals to shift a larger volume of patient care to telehealth.
Latest trends show that main telehealth diagnoses include - diabetes, hypertension and cholesterol. Longer term, the shift will drive lower medical costs, benefitting payors and plan sponsors. The US already spends more than twice on healthcare per capita - than the average OECD country.
Source: Coronavirus & the Future of U.S. Health Care | Morgan Stanley
- Digital health technologies could see accelerated adoption. Digital pharmacies could deliver opportunities for investors, and major e-commerce companies will likely speed up entry into the health-care marketplace.
In summary, key future Healthcare changes we see include:
- An explosion of telehealth visits.
- Remote inpatient consults and family visits.
- Online scheduling and the automation of patient triage.
- Artificial intelligence to allocate resources and make clinical decisions.
- Supporting remote work and communication for team members.
- Mobilizing teams to create PPE (equipment).
- Ensuring connectivity at remote COVID-19 testing sites and expanding capacity.
An example of such change is New York – it has finally put all area hospitals into a single statewide system, enabling the sharing of patient data, equipment and supplies, as well as doctors. Digital platforms that leverage the IoT and enable orchestration between machines and humans will make care more efficient. These will be expectations and not nice-to-haves going forward.
In the future, healthcare consumers will expect their pharmacies and home assistants such as Alexa to integrate with their health records and trigger actions.
Our largest holding Regeneron has identified hundreds of virus-neutralizing antibodies; plans to initiate large-scale manufacturing with antibody cocktail therapy. This biotech leader is at the forefront of the race to find a vaccine for COVID-19.
Top 20 May Performance Contributors (Holdings) – ranking by % contribution
Price Performance #### Contribution to Return
Company Name #### Sub-Themes #### YTD #### May #### YTD #### May
Regeneron Pharmaceuticals, Inc. Biological Engineering 64.14% 16.53% 2.72% 0.70%
DexCom, Inc. Medical Devices 72.45% 12.86% 1.96% 0.35%
West Pharmaceutical Services, Inc. Biological Engineering 42.38% 14.15% 0.64% 0.21%
BioMarin Pharmaceutical Inc. Biological Engineering 26.78% 15.79% 0.56% 0.33%
Quidel Corporation Biological Engineering 133.96% 25.90% 0.49% 0.09%
Illumina, Inc. Genome Sequencing 11.02% 13.80% 0.41% 0.52%
Livongo Health, Inc. Healthcare Tracker 137.63% 49.79% 0.40% 0.15%
Bio-Rad Laboratories, Inc. Class A Medical Devices 32.02% 11.64% 0.35% 0.13%
ABIOMED, Inc. Medical Devices 32.63% 17.07% 0.34% 0.18%
Fisher & Paykel Healthcare Corporation Medical Devices 24.95% 10.24% 0.30% 0.12%
QIAGEN NV Biological Engineering 29.06% 5.04% 0.29% 0.05%
bioMerieux SA Biological Engineering 60.13% 15.62% 0.29% 0.08%
Alnylam Pharmaceuticals, Inc Biological Engineering 17.00% 2.71% 0.29% 0.05%
Olympus Corp. Medical Devices 11.55% 7.58% 0.27% 0.18%
Sysmex Corporation Biological Engineering 16.36% 14.78% 0.24% 0.21%
Sarepta Therapeutics, Inc. Biological Engineering 17.96% 29.17% 0.23% 0.37%
Biogen Inc. Neuroscience 4.37% 3.46% 0.22% 0.17%
Neurocrine Biosciences, Inc. Neuroscience 15.20% 27.12% 0.20% 0.36%
Shandong Weigao Group Medical Medical Devices 48.76% 14.71% 0.19% 0.06%
ACADIA Pharmaceuticals Inc. Neuroscience 20.85% 2.84% 0.18% 0.02%
STERIS Plc Medical Devices 9.35% 16.41% 0.16% 0.29%
Seegene, Inc. Genome Sequencing 253.72% 23.53% 0.16% 0.02%
Source: FactSet, Indxx
| #### Country Breakdown | #### Weights |
|---|---|
| United States | 83.88% |
| Japan | 5.60% |
| Switzerland | 2.62% |
| United Kingdom | 2.26% |
| New Zealand | 1.38% |
| Australia | 0.96% |
| Hong Kong | 0.77% |
| France | 0.73% |
| Sweden | 0.55% |
| Denmark | 0.35% |
| Italy | 0.39% |
| India | 0.27% |
| South Korea | 0.24% |
| Dividend Yield | 0.35% |
| #### Sub-theme | #### Weight |
|---|---|
| Medical Devices | 54.88% |
| Biological Engineering | 26.91% |
| Neuroscience | 7.51% |
| Genome Sequencing | 5.26% |
| Robotics | 4.21% |
| Healthcare Tracker | 1.07% |
| Bioinformatics | 0.11% |
| Nanotechnology | 0.04% |
| #### Top 10 Holdings | #### Country | #### Industry | #### Weights |
|---|---|---|---|
| Regeneron Pharmaceuticals, Inc. | United States | Biotechnology | 6.50% |
| Biogen Inc. | United States | Biotechnology | 4.92% |
| Edwards Lifesciences Corporation | United States | Medical Specialties | 4.45% |
| DexCom, Inc. | United States | Medical Specialties | 4.39% |
| Intuitive Surgical, Inc. | United States | Medical Specialties | 4.21% |
| Illumina, Inc. | United States | Biotechnology | 3.84% |
| Medtronic Plc | United States | Medical Specialties | 3.80% |
| Agilent Technologies, Inc. | United States | Biotechnology | 3.60% |
| Boston Scientific Corporation | United States | Medical Specialties | 3.49% |
| Zimmer Biomet Holdings, Inc. | United States | Medical Specialties | 3.36% |
Source of all data: FactSet, Indxx Data as of 29/05/20
Learn more about HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL)
HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) is a UCITS compliant Exchange Traded Fund domiciled in Ireland.
WELL tracks the Indxx Advanced Life Sciences & Smart Healthcare Thematic Index (Net Total Return), an index designed to measure the performance of large, mid and small-capitalisation companies primarily listed on an exchange in Developed and Emerging Markets that are involved in the Advanced Life Sciences & Smart Healthcare sector.
Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance.
| #### EXCHANGE | #### BB CODE | #### RIC | #### ISIN | #### CURRENCY | #### INCOME |
|---|---|---|---|---|---|
| London Stock Exchange | WELL LN | HAWELL.L | IE00BJQTJ848 | USD | Acc |
| London Stock Exchange | WELP LN | WELP.L | IE00BJQTJ848 | GBP | Acc |
| Borsa Italiana | WELL IM | WELL.MI | IE00BJQTJ848 | EUR | Acc |
| XETRA | W311 GY | W311.DE | DE00A2PE7K4 | EUR | Acc |
| SIX | WELL SW | WELL.S | IE00BJQTJ848 | CHF | Acc |
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