Company Interview / Where to find value in the healthcare sector

Key bullet points:

- Growing investor interest in smaller healthcare and biotech companies

- Market disruptions from drugs like GLP-1 are creating new opportunities

- Companies such as Cochlear (ASX:COH) and $RMD (ResMed) seen as potential beneficiaries of sector trends

- Emphasis on good management and unmet medical needs in driving investment

Dr Laura Sutcliffe from Citi highlights renewed investor interest in the healthcare sector, especially within smaller biotech companies. Sutcliffe observes increasing appetite for novel drug development and fresh investment ideas. While healthcare remains a defensive sector, some investors are drawn to the high-risk, high-reward nature of biotech, particularly where unmet medical needs are addressed and innovative solutions are explored. Sutcliffe points to the appeal of early-stage data and proven management as confidence drivers in these high-growth areas.

Market disruptions remain topical, with the rapid rise of GLP-1 drugs cited as a major industry inflection. Sutcliffe references the expanding use of these obesity and diabetes drugs well beyond their original intent, indicating that other healthcare segments like cochlear implants (ASX:COH) may experience similar transformational moments. The prospect of emerging solutions addressing broader patient bases is considered a significant theme.

Sutcliffe also cites $RMD (ResMed) as an example of a company benefiting from these disruptions. The greater focus on health awareness, partially prompted by new drug classes, may increase diagnoses of conditions such as sleep apnoea and drive demand for devices like CPAP machines. Sutcliffe stresses the importance of strong management and the constant search for companies with breakthrough potential at both large and small ends of the sector.