Name: Why Innovation Is Reviving Pharma Stocks
Uploaded: 2016-11-30
Duration: 4 min 10 s
Description: Our panel of investor experts weighs in.

[ SOUND ] [ BLANK_AUDIO ] An industry that was one the steady growers over the last for years, but that we haven't really touched on at all is healthcare. I mean, I know Certainly health policy and potential changes in ObamaCare, for example. And potential changes in regulation are part of the Trump economic plan. Where is healthcare figuring, if at all, in your minds right now? Well, there definitely is a value component to healthcare. That's why we're all looking at you. [ LAUGH ] But it's largely in pharmaceuticals and especially the European pharmaceuticals. Some of them, like I know Vardis or. Sanofi would have had some struggles in the past. They've gone through what we called the generic cliff so they've passed the years where generics are creating a real problem with some of their highest grossing drugs. But it's all about as Sebastian noted you have to have innovation otherwise you really don't have much. Sure. And they key is to get these stocks. An evaluation. We want to buy them where we're paying for the present value of all the cash generated from their existing products without paying anything for their pipeline. So that, to us, is a good deal. Something's gotta come out of all that R & D. Sure. Much of which is spent in this country. Healthcare was a Big component of why value did well in the Trump trade relative to growth. Within healthcare you've had different reactions. You have insurers that could benefit, pharmas that could benefit but then hospitals went the other way because now you have less people who are injured. Right. Or at least that's what we're anticipating. So I think within healthcare biotechnology is a very interesting sector for people looking for growth. Biotechnology used to be a growth sector Growth sector got hit really hard first part of 2016 and has recovered some but still an ongoing process. I think the way to think about via technology is basically is outsourcing of innovation that large firm companies used to do, and because it is so uncertain they don ` t want to do that anymore, so they let these companies develop these new technologies of products and then they go out and buy them, and there are plenty of opportunity in that space. Yeah, it's interesting when you see some of the big data initiatives and you look at IBM's big bed on Watson. What was the first market they entered into with Watson? Healthcare, and that's independent of all the innovation that's happening in genomics. And when you talk about biotechnology the cost to start a young bio- tech company to set up that lab which is now. All software, independent on big data is much, much less. It doesn't mean the cost to bring a drug to market is any less. But you have really a massive change. And again, the pieces that health care can use. Will that affect the companies in the year 2017? Probably not, but it's already permeating the landscape of health care. We've talked about big data as it relates to corporate. So I think the other interesting opportunity, clearly big data can be leveraged to drive revenues, to reduce costs, and improve margins. As asset managers, we also have the opportunity to leverage big data, and so we do a lot of natural language processing of cell side research reports, to To anticipate trends in outlooks for companies. And we think asset managers who are able to find the signal through the noise, right? So we have eight times more data being created in 2016 than in just 2013. So a massive exponential growth in data. And asset managers who can leverage big data to find investment themes before they're reflected in the market, we think can drive outsized returns for investors. So the 20, 000 coders to whom- [ LAUGH ] You referred earlier, this is what they're doing. No, only a small section of them are the data scientists. [ LAUGH ] Well, I guess that's true. I guess that's true. The interpreters. [ BLANK_AUDIO ]