KBank Private Banking promotes investment in global healthcare via K-GHEALTH - an equity fund that focuses on healthcare innovation

Stocks and Financial Services Press Releases Tuesday January 5, 2021 10:39
Bangkok--5 Jan--Kasikorn Bank

KBank Private Banking (KPB) promotes investment in global healthcare via K-GHEALTH focusing on long-term investment to capitalize on the new horizon of medical innovation - precision medicine that idealizes customization of treatment, practices and medical decisions according to each patient's needs, with diagnosis by the individual's genetic structure. This novel healthcare model can respond well to the changing consumer behavior and lifestyles of the 'new normal' era which has given rise to new trends of public health service and healthy living amidst an aging society. In a seminar titled "Health is Wealth", Professor Dr. Manop Pithukpakorn, a Thai expert in precision medicine, was invited to provide insights on the progress of the global healthcare business. Also present were fund managers from J.P. Morgan Asset Management Company and KASIKORN Asset Management Co., Ltd. (KAsset).

Ms. Siriporn Suwannagarn, KBank Managing Director - Financial Advisory Head Private Banking Group, said that Thailand has set its sights on becoming a medical hub by 2025. Thailand has potential in terms of knowledge, personnel and technology that can be developed to achieve that goal. Precision medicine is one of the major elements of this effort. In addition, it is hoped that the successful development and deployment of COVID-19 vaccines will turn things around, allowing us to return to a normal life and bring the economy back from the brink. Therefore, opportunity abounds for investment in global healthcare thanks to the emergence of innovative technology.

According to Dr. Manop Pithukpakorn, Professor of Medicine and Head of the Medical Genetics Division, Department of Medicine, Faculty of Medicine, Siriraj Hospital, Mahidol University, the medical business segment has one of the largest research and development budgets of all industries. In addition, the emergence of the COVID-19 pandemic has proven an important accelerator for pharmaceutical companies to apply innovative technologies in making a vaccine as quickly as possible. In 1991, a group of scientists were interested in genetic decoding, but their attempts received no attention, because at that time people did not realize the importance of this endeavor; it ultimately took 13 years and a budget of USD3 billion or THB100 billion to decode the genes of a human.

Nevertheless, this genetic decoding knowledge brought about two new things, including: 1) an understanding that human genetic codes are important factors of disease and illness; and 2) genetic decoding can now be done far more rapidly and at a considerably lower cost thanks to the technological advancement. Formerly, seriously ill patients with the same issues were all treated using the same methods, and the results differed on a case-by-case basis. Treatments have now become more efficient for all patients, with precision medicine that uses genetic codes to learn where each patient's problems come from and which treatment should be applied for the best result. Precision medicine identifies how each patient's sickness and physical abnormality differs from others. In addition, precision medicine can detect existing risks to prevent illnesses before they can manifest themselves.

Amid global anticipation and concerns over COVID-19 vaccines, it is the first time in the medical field that all innovations and knowledge across the globe have been enlisted in a joint effort for the most rapid vaccine development in our history - only eight months, and the first vaccines have already been administered. There are now 140 vaccines under development, and two companies' vaccines have been approved, namely those of Moderna and Pfizer, with four or five other companies that are close behind. In 2021, the combined production capacity of these companies will reach 8 billion doses to cover more than 50 percent of the world's population. With proper allocation of vaccines, the COVID-19 pandemic will hopefully be halted, and normalcy will be regained.

Mr. Nicholas Wilcox, Executive Director, Investment Specialist, J.P. Morgan Asset Management International Equity Group, said it is exciting that the relevant groups have joined forces to hopefully end the pandemic. This along with the large amounts of investment in public health, staunch efforts to combat the pandemic, vaccine invention, supply chain restructuring, and the use of technologies in daily life, including social distancing, telemedicine, and real-time remote communication between patients and medical personnel, are some examples of megatrends. At the same time, disruptions stemming from changes in the population structure, transition towards an aging society, and expansion of medical services into developing countries represent key drivers over the long term. Although healthcare services have been popular for some time, it cannot be denied that the COVID-19 pandemic has quickly prompted people to become more health conscious, causing health-related businesses to thrive. Looking deeply into the healthcare sector, we are of the view that many sub-categories in this sector, which remain strong while prices are not too high, including large market cap pharmaceutical companies, and small to medium market cap biotech companies, will be major beneficiaries of mergers or acquisitions. Finally, we view that the healthcare sector exhibits a promising outlook and will steadily launch innovations going forward. Therefore, investing in healthcare businesses remains interesting, as it will likely offer favorable returns over the long term.

K-GHEALTH primarily invests in four groups of medical and healthcare stocks:

Pharma - Effective drugs and medical equipment, such as those produced by Roche, which manufactures serology test kits. Presently used for the COVID-19 pandemic, Cobus Pure can test 1,440 samples within 24 hours and deliver results within 3.5 hours. Moreover, progress has been made on medical equipment that allows faster detection of the disease, requiring merely 15-30 minutes - helping to effectively reduce the spread of COVID-19. Meanwhile, blood glucose meters like Accu Check have been developed to the extent that they can now be linked to smartphones, facilitating the measurement and monitoring of blood sugar levels, giving patients a clearer picture on how to stay healthy and maintain an appropriate blood glucose level. One such developer, Novo Nordisk, specializes in diabetes, supplying over 50 percent of the insulin available in today's market. Recently, the company has developed insulin capsules which will make it easier for patients to receive medication.Biotech - Treatments that provide a cure at the genetic level. For instance, Amgen, a company that specializes in treating cancer and heart disease, which has developed medicine that prevents heart failure by strengthening cardiac muscles and addressing the problems at their source; and Alexion, a company that focuses on treating rare diseases like hypophosphatemia.Medical Tech - Technology used for precision medical diagnosis to deliver accurate treatment. For instance, Twist Bioscience, a synthetic DNA manufacturer, has joined Microsoft in storing DNA data digitally.Healthcare Services - Access to public health services at reasonable prices. For instance, many companies and doctors operate within the networks of Centene and United Health Group's health insurance system.

K-GHEALTH has made a total of eight dividend payments, worth 1.90 Baht per unit. Regarding last year's performance, the Fund offered an average dividend yield of 3 percent per year, with dividend yield totaling 45.5 percent since the Fund's inception. (Data as of December 2, 2020)

Ms. Siriporn concluded, "Investments that offer the best yield are long-term investments. Substantial budgets have been allocated towards medical advancement for a higher quality of life. Given limitations in terms of rules and regulations for investment, we should rely on an investment specialist well-versed in healthcare industry like J.P. Morgan. Lastly, KBank believes that investment in global healthcare will undoubtedly prove to be a worthy investment in the long run."

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