Imagine 2025: A Post-Pandemic Landscape

By Deane Dray
Published July 24, 2020 | 3 min read

In a post-coronavirus world, three key opportunities we see for industrials companies that produce therapeutic drugs, vaccines, testing supplies, ventilators, and PPE will be in COVID-19-related medical demand, the reshoring of pharma and medical devices, and telehealth/virtual medical services.

The post-pandemic landscape will redefine how business is conducted, spawn new products and services, and alter risk parameters. Deane Dray, our Multi-Industry Equity Research Analyst, authored a research report that outlines key opportunities within the multi-industry sector from his research report “Post-Pandemic Landscape – Implications for HVAC, Aero, Healthcare, and Automation,” the latest addition to our Imagine 2025 research series, published on July 20, 2020. In this article, we focus specifically on his takeaways for healthcare verticals integral to combatting the COVID-19 pandemic.

Disclosures and Disclaimers

In the midst of the pandemic and beyond, we will see demand shifts and new market opportunities across industries, from HVAC to aerospace to automation to healthcare. Looking particularly at the implications for healthcare, there are three key opportunities for healthcare businesses within the multi-industry sector: (1) COVID-19-related medical products, including vaccine and drug production, testing, ventilators, respirator masks, etc.; (2) pharma and medical device re-shoring into the U.S.; and (3) broader adoption of telehealth and virtual medical services.


Keeping Up with COVID-Related Medical Demand

In discussing the emergence of a post-pandemic world, it is impossible to overstate the role that the healthcare industry will play in reopening the economy over the coming months. Arguably, no economic revitalization effort will be sustainable without mass testing capabilities or the commercialization of a vaccine or therapeutic. There has been no shortage of recent news headlines about potential medical breakthroughs, but many healthcare experts agree that a proven COVID-19 vaccine would likely not be widely available until year-end or 2021 at the earliest.

In the interim, the ongoing efforts to combat the pandemic’s spread are being led by many biomedical and healthcare companies on the frontlines in testing, vaccine/therapeutic development, and even personal safety and respirator mask production. Specifically, these urgent medical supply endeavors include:

  • COVID-19 testing capabilities. In our view, the linchpin of any economic recovery over the coming months will be the ability for governments and corporations to expand COVID-19 testing capabilities.
  • COVID-19 vaccines and therapeutics. With the world anxiously awaiting the discovery of a COVID-19 vaccine, it will be up to the healthcare industry to lead the efforts to uncover this medical breakthrough.
  • Ventilator and medical products. Until a vaccine is discovered or the infection curve flattens, we expect there to be elevated demand for life-saving ventilators and other resources at hospital and medical facilities, given respiratory symptoms associated with the virus.
  • Respirator masks. In our view, no single product has seen as dramatic of a demand spike in the age of COVID-19 as the respirator mask.

Re-shoring Pharma and Medical Device Production

In the wake of the COVID-19-related business disruptions that have exposed the interdependency of global supply chains, there is increased national interest in “re-shoring” manufacturing capacity back into the U.S. Proponents of re-shoring have pointed to the recent shortages in medical protective gear, with many of these products and components from Asia.

Right now, countries are racing to be the first to develop a COVID-19 vaccine and scale up production. If this medical breakthrough comes from China or Europe, it is unclear whether the U.S. will be able to successfully secure enough supplies for its own populace. Given this potential risk, there is likely to be increased pressure for pharma and medical companies to invest in re-shoring their production capacity back into the U.S.


Adoption of Telehealth and Virtual Medical Services

The adoption of telehealth and virtual medical services may be accelerated by social distancing measures. With mandated lockdowns and stay-at-home measures transforming the ways in which people interact with companies, many business models are rapidly adapting for this new socially distanced reality.

In a recent RBC Imagine 2025 report, our Healthcare IT/Digital Health analyst Sean Dodge estimates that the long-term annual utilization rate of telehealth could reach +150% over the next decade, with 35%-40% of general medical and specialist visits already characterized as “virtually addressable” (for more details, please see the May 27 report here).

Overall, we believe that no economic revitalization effort will be sustainable without mass testing capabilities or the discovery of a vaccine. In the meantime, the healthcare industry should benefit from reshoring, expanded COVID testing, PPE, and telehealth.

Deane Dray, our Multi-Industry Equity Research Analyst, authored the research report “Multi-Industry: Post-Pandemic Landscape - Implications for HVAC, Aero, Healthcare, and Automation” published on July 20, 2020. For more information about the full report, including the post-pandemic landscape for HVAC/building controls, commercial aviation, healthcare, and automation end markets, please contact your RBC sales representative.

Deane Dray

Deane Dray
Managing Director, Multi-Industry & Electrical Equipment Equity Analyst, RBC Capital Markets, LLC

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