Healthcare outlook 2020; Will Polynovo Continue its Current Rally?

Healthcare outlook 2020; Will Polynovo Continue its Current Rally?

As global health is challenged by various demographic and economic changes, the advancements in the technology of all forms provide the opportunity to significantly alter the way healthcare services are delivered to meet a number of challenges.

The healthcare industry across the globe is evolving and shifting towards a noticeably different future, which is believed to be more precise and reliable in curing diseases with increased ease and automation. We have seen how technology has revolutionised the healthcare sector in so many ways through a wide spectrum of innovations.

Read: Health Care & Technology: A Perfect Blend For Each Other

Developing competency on the basis of innovation and technology has become a thing for the contemporary healthcare companies with interoperability of useful health data, next-gen therapies, customised medicine, robotic surgery and artificial intelligence and Internet of Things-enabled health devices.

The intensity of research and development that is undertaken by the healthcare companies globally helps to produce a safer and healthier environment around us.

“Study the past, if you would divine the future”

- Confucius

The past year has seen significant developments in the healthcare sector of Australia as well as globally, with some persistent factors mentioned below have resulted in the expansion of the market and the same remain in place for future:

  • Growing and aging population;
  • Escalating occurrence of chronic diseases;
  • Investments in infrastructure;
  • Technological advancement;
  • Evolving care models;
  • Higher labour costs in times of worker shortages;
  • Expansion of health care systems in emerging markets;

However, many of the world’s health systems are currently combating to maintain financial sustainability in an ambiguous and dynamic environment. Even though there has been an immense revolution in the healthcare sector, sadly, chronic diseases worldwide have also increased.

Moreover, the very recent outbreak of coronavirus has created a mixed environment for the stakeholders with its impact on the international business. The disastrous impact of the coronavirus outbreak has left the world in a state of flux, bringing major misery to China on various fronts.

The changing lifestyle of the people of Australia is another challenge faced by the healthcare sector as the biomedical factors like high blood pressure and high cholesterol levels, to behavioural factors such as whether one smokes, drinks alcohol or receives enough exercise are commonly seen these days.

Amidst such amplifying situation, healthcare companies are continuously investing in the research and development to address the issues.

Several Australian based medical companies are engaged in developing solutions for contemporary health issues and have significantly expanded into other countries as well.

A healthcare player in the Australian market has expanded into the international market recently. The stock market witnessed a surge in its prices following the Company’s announcement regarding its current expansion and plans for the expansion.

Is PolyNovo a Promising Player in the Sector?

A medical device company that engages in the designing, development and production of dermal regeneration solutions, PolyNovo Limited (ASX:PNV) launched in January in both the UK and in the DACH regions - Germany, Austria, Switzerland.

The Company’s NovoSorb BTM, a dermal scaffold that helps in the regeneration of the dermis when lost through intense surgery or burn, has been successfully used for surgeries in Switzerland as well as the UK.

Source: Company’s Report

In the last one month, the PNV stock has increased by 48.79% and the same has delivered 98.71% returns in the last six months.

On 14 February 2020, the stock settled at a price of $3.000 just shying away from its 52-weeks high price of $3.140. The stock fell by 2.597% during the day’s trade.

PNV Conducts First Surgery in England

The Company achieved its first surgeries in England, Germany and Switzerland, with latest being the application of NovoSorb BTM to the first two patients in the UK, including -

  • one patient treated for Necrotising Fasciitis in an English NHS hospital,
  • second patient treated for a scalp defect, and
  • several other NHS hospitals currently in the process of selecting patients for surgeries.

PNV has a lot to offer to the market in upcoming times with plans in place to capture the highly potential market of derma.

Amidst the uncertain times, the Company looks forward to the promising opportunities to grow and expand.

Let us learn what PolyNovo has got for the investors’ attraction:

Progress and Plans of PNV

The Company is focused on driving the business with aggression and expand for the top-line growth with continuous investment due to high gross margins.

Moreover, the Company is progressing strongly in the US and has increased its sales team in the US.

The total market in the countries where PNV is currently selling is approximately $1 billion with $400 million alone in chronic wounds in the US alternate care market which is significant as the Company has a penetration in the market.

PNV looks forward to capturing the market as much as possible and believes that the skin space is a very good space for them to get started.

Moreover, the Company views significant earnings opportunity within the space, since it might later enter the hernia space (a $2 billion market space growing at over 7% a year) and other spaces with this polymer as well.

In addition to these, the Company has got much more on the opportunity side,

  • The breast market is around $2.5 to $3 billion, and then it can make a drug-eluting polymer that can go underneath the skin and release a titrated dose of a drug per day;
  • The use of NovoSorb BTM is into space where one can inject islet cells into it for the treatment of diabetes;
  • The St Vincent's Institute is currently growing liver organoid cells in NovoSorb foam to study the mechanisms of actions of liver cancers, and
  • In the longer-term, the possibility of doing some work with NovoSorb organ regeneration, which remains only speculative presently.

PolyNovo expects financial results for the half-year FY2020 to be released towards the end of February 2020.

With still a long way to go, the Company sees no reason for not being a very successful Australian multinational on its own and is entirely focused on running its business as a very successful commercial enterprise.

Another Australian based healthcare company, Starpharma Holdings Limited (ASX: SPL) launched its VivaGel® BV (novel, non-antibiotic therapy for treatment and prevention of bacterial vaginosis) in Asia by Mundipharma, under the brand name BETADINETM BV Gel as regulatory approvals are granted.

  • Asia is the third region to launch VivaGel® BV and offers a huge commercial opportunity for the Company with access to more than 1.5 billion women, and
  • Moreover, the regulatory activities are underway for multiple countries across other Mundipharma regions.

In addition to the above, Starpharma also received USD 3 million (A$4.5 million) from AstraZeneca subsequent to the successful dosing of the first patient in the phase 1 clinical trial of AZD0466 in December.

The Company also stood cash flow positive at the end of 31 December 2019 with $35.9 million cash balance (excluding the USD 3 million payment from AstraZeneca) and net operating cash outflows for the quarter of $0.5 million, compared to $4.6 million last quarter.

Following the announcement regarding the launch of its product into the Asian market on 13 February 2020, the SPL stock registered a 3.097% increase and settled at a price of $1.165 on the same day. Also, on 14 February 2020, SPL last traded at $1.200, rising up by 3.004 percent from its last close.

Other than the two stocks discussed above, there are numerous healthcare stocks that have immense opportunity lying ahead.

Since we all acknowledge that technology-driven research and development is unavoidable in the current scenario for a healthcare player, let us take a closer look at the major driving factors.

What is Expected to Drive the Healthcare Sector?

According to a major research source, healthcare and life sciences, deal activity was robust in 2019, and the future is expected to bring an exciting time for the global health care sector as it progresses along its journey.

Investors across geographies would be keen to watch these developments in order to form an opinion while bearing in mind that disruption can yield both opportunity and risk.

Moreover,

  • The technologies such as cloud computing, artificial intelligence, Internet of Medical Things, etc. can help simplify health care delivery and bring it into line with shifting consumer preferences;
  • Increased use of Data-as-a-Platform (DaaP) to extract insights from patient data is expected to be an area of interest for most health care players, and
  • As virtual health care increases in capability and popularity, organisations are likely to continue investing in security tools and services to identify risks and keep them at bay.

The investment activity in the healthcare and life sciences is further expected to be broadly driven by the shift towards value in healthcare, paying for innovation in life sciences, new market entrants, and social determinants of health.


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