The effects of the global health crisis remain tangible today. On the more positive side of the ledger, the COVID-19 pandemic dramatically altered the healthcare landscape and did so with long-ranging implications for investors. Not all healthcare exchange traded funds are up to the task of meeting the sector’s new, modern complexion, but the Goldman Sachs Future Health Care Equity ETF (GDOC) is.
Adding to the long-term case is the point that healthcare innovation — be it in the form of improved treatments, declining costs, or enhancing technologies, among other factors — has implications that reach far beyond Wall Street.
“Adapting to these shifts, along with myriad others, will require many healthcare organizations to transform their operations—and their mindsets. Past research shows that prioritizing innovation during crises can help unlock growth in the recovery, provided leaders approach it with commitment and establish key capabilities and processes,” according to a McKinsey report.
It’s possible that over time, basic old guard healthcare ETFs will prove adequate in addressing the sector’s rapidly changing landscape. However, investors should strive for better than “adequate.” GDOC is ideally positioned for an environment in which healthcare providers want innovation and exposure to more technological concepts in an effort to deliver better patient outcomes.
To that end, the McKinsey report indicates that clinicians and healthcare providers want to make “bold bets” and take “start-up” approaches to improving care. Assuming they remain true to those objectives, GDOC could benefit over the long term.
Respondents to a survey “also reported a greater willingness to take risks and use agile decision making to determine how best to address new business segments. In fact, several companies have adapted their operating models to purposely select and test multiple ideas quickly rather than committing up front to a single path,” noted McKinsey.
Another potential positive for GDOC going forward is that the pandemic highlighted the effects of the Food and Drug Administration (FDA) expediting approval processes.
“From vaccines to new designs of personal protective equipment (PPE) and ventilators, numerous recent examples demonstrate the healthcare sector’s ability to innovate at previously unimagined speeds. In the United States, the US Food and Drug Administration deployed a range of measures (such as issuing new guidance, establishing new industry engagement models, and issuing emergency use authorizations) designed to support the COVID-19 response across the range of products it regulates,” concluded McKinsey.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.