The Healthcare Sector

kettleitchyBiotechnology

Dec 5, 2012 (4 years and 6 months ago)

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The Health Care Sector

Analysts: Heather Hund

and Emily Butler

The Health Care Sector


Health Care companies seek to promote the wellness of
individuals through the
development

and
distribution

of
products or by providing health care
services

or
products
.


The sector can be categorized into four major sub sectors
according to the current Cox Holdings:



Biotechnology



Health Care Services



Supplies and Equipment and



Medical Waste Management



Other sub sectors exist. A sub sector that is not held by the
Cox Portfolio would be:



Drugs and Pharmaceuticals

Healthcare Sub Sectors and

COX Holdings

Health Care


Sector

Biotechnology

Services

Supplies and

Equipment

Medical Waste

Management


Amgen Inc.

(AMGN)



Quest
Diagnostics

(DGX)


Medtronic
Inc.

(MDT)

Stericycle Inc.

(SRCL)


Biotechnology


Sub sector
-

Biotechnology
: Companies utilize genomics to develop
and sell drugs, therapeutic products, research equipment, and related
research services


Historic v. Future markets


R&D accounts for over 50% of companies


Regulation by FDA


Cox Holding
-

Amgen (AMGN):

Global biotech company that
discovers, develops, manufactures, and markets human therapeutics


Main areas of focus: oncology, nephrology, inflammation


Main drugs developed in these areas


Acquisition to expand R&D capabilities




Healthcare Services



Sub Sector
: Healthcare Services


Provide, support, and market medical, surgical, or health care services


Companies Providing: health plans, home health services, general services to
hospitals and long term care facilities, diagnostic and laboratory services, and
specialized health care services


Legislative/Demographic Impacts: benefiting from private pay rate hikes and
favorable demographic trends


Cox Holding
: Quest Diagnostics


leading global provider of laboratory testing services: 30 principal laboratories in
the United States as well as 2,000 international patient centers, processes over 130
million order forms annually


Testing: routine, esoteric, clinical trial


detection, diagnosis, evaluation, monitoring and treatment of diseases and medical
conditions by physicians, managed care organizations, hospitals, governmental
institutions, employers, prisons, and independent clinical laboratories



Medical Equipment and Supplies


Sub Sector
: Medical Equipment and Supplies


Innovate and develop new products designed more efficiently and effectively


Patent rights to technology = Competition


Specific Costs: R&D and the potential lag time for FDA approval.


Not discretionary therefore always a market


Trend: Consolidation


Cox Holding
: Medtronic


Leading maker of implantable biomedical devices


Key Business:
Cardiac Rhythm Management, Neurological, Spinal and ENT Surgery,
Cardiac Surgery, and Vascular


Strategy: expand market share and product lines through in
-
house development
and acquisitions



Recent Acquisitions: stent maker, spinal implant maker, surgical products


Result: bundled products

Medical Waste Management


Sub sector
-

Medical Waste Management:
Companies that treat,
transport, and manage medical waste


Services and Clients



Regulation: OSHA and FDA


Cox Holding


Stericycle (STRL):
Largest North American medical waste
management company that provides waste collection, transfer and disposal,
OSHA compliance services, and waste consulting services.


Diversified Client base


Acquisition based growth strategy


New products


(i.e. consulting services and waste management training)




Healthcare Sector Breakdown

Healthcare

Sub
-
Sector

Market Cap (B)

Cox Holding

Market Cap (B)

%Sub Sector Market Cap

Biotechnology and Drugs


$ 524.0

Amgen


$ 66.90

12.77%

Health Care Facilities


$ 109.0

Quest


$ 8.70

7.98%

Medical Waste Management


$ 30.1

Stericycle


$ 2.00

6.64%

Medical Equipment and Supplies


$ 304.0

Medtronic


$ 60.50

19.90%

Major Drugs


$ 1,117.0

-


-


-

Market Outlook


Threats

and
Opportunities
to specific industries


Biotechnology:


Threat
: Biogenerics, Growth Company Competition


Opportunity
: High Price Maintenance, Undervaluation


Medical Equipment and Supplies:


Threat
: Budgetary Pressures, Supply/Demand imbalance


Opportunity

Product Launches, Positive Long Term Fundamentals,
Increased Mergers and Acquisitions


Overall
PROGNOSIS
:
Optimistic


Constant increased demand: Demographics


Consistent Across Sectors


Anticipation: The Long Run