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Opportunities in Healthcare

DAVID SEMPLE: So I think it was a very interesting time to come to China. There's clearly been a lot of stimulus that has gone on in the context of an economy which is naturally slowing down. So, the question is, How’s that is working? And, How are the disruptions in various sectors working? Which is really important when you analyze that. Because [there’s] a lot of change. So, for instance, I spent a lot of time in the healthcare chain, with pharmaceutical companies, trying to figure out how and how quickly we're moving from a relatively dysfunctional delivery system for medical services and drugs into a much better, cheaper, and more innovative environment for healthcare in China. And that goes from everything from the delivery of medical information and diagnosis through telemedicine into the development of pharmaceuticals, in particular. Things along the lines of biosimilars. Truly innovative work has been done there. I think that's important to understand. But it also raises some really nice opportunities in terms of investment. However, with some high stock-specific risks in those companies. So, we're busy working hard, trying to figure out which companies are the winners out of this and trying to figure out how exactly we would access them.

 

Impact of Coronavirus

SEMPLE: And I think there's also a lot of concern about China and China's slowing down and if there are dislocations, let's put it that way, in the Chinese economy. And our view is always, yeah there are. Yes, it's slowing down, yes there are dislocations, but these are not fundamental. These are not going to derail the whole story. If you can pick your spots, pick your companies, pick your sectors, pick your industries, then you can do very well, as we have done over the years in in our Chinese investments. So that's one aspect of it.

 

Now, one thing that's relatively recent that comes into this whole equation for emerging markets is obviously what's happened with Wuhan and the coronavirus there. Look, it's a fast moving situation. There's a lot of emotive language: “ground zero”, people in hazmat suits. I think this is same but different from SARS episode, which obviously, I lived through. I think it's ... The incidents of this particular coronavirus is higher, so the infection rate appears to be higher. However, there's no doubt that it will slow down economic activity. They're much more on top of it this time, the Chinese. Whether they are on top of it completely is a question mark, but they're much more “executive”, let's call it that way, about what's happening. They're not really trying to hide it under the … , sweep it under the carpet. So that's going to be a big issue as we look into first quarter numbers and when, or if and when, we see the peak in this, then I think we might get a very rapid rebound in riskier markets. And that's what emerging markets still are.

 

 

Ping An Good Doctor: The Future of Healthcare

SEMPLE: So one of the companies that we own, and I caught up with when I was in Shanghai is a spinoff from the Ping An Group. Ping An is one of the largest insurers in China. And this company's called Ping An Good Doctor. What Ping An Good Doctor does is telemedicine. So effectively, the issue in the past in China is that if you wanted to see a doctor, you really had to go to hospitals. There's very little sort of family practitioners. You'd go to the hospital; you have to wait a couple of hours typically for your appointment. It might be something relatively simple and you get some medicine for it, you get the prescription, you get that filled but it's only for a month and then you have to do it all over again. You might live two or three hours away from the hospital and then two or three hours in the hospital. I mean, this is a big problem in terms of people actually getting access to it. And some cases, there just isn't enough specialist doctors, so a lot of ailments go un-prescribed, undiagnosed. For instance, the instance of gastric cancer is probably a lot higher in China than the numbers will tell us.

 

So what this company does is it effectively provides artificial intelligence enhanced that helps the doctors diagnose what is going on with the patient. Now at this stage, a lot of these diagnoses are free. The first 15 minutes is effectively free. As they prove the concept, as they bear the brand name out there, and as they get the data to be used to make the systems even better going forward, and then we're moving into a situation where China's increasingly liberalizing the delivery of prescriptions online. So, a lot of that takes away that dysfunctionality of what's going on in the regular medical consultation market in China.

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