White paper discussing investment opportunities related to the U.S. healthcare reform released

Dec 18 2009

Rockefeller and Company - a leading global wealth management firm serving high-net-worth individuals, families, trusts, foundations and endowments - today released "The Investment Opportunities in Healthcare Reform," a white paper discussing the compelling investment opportunities related to the U.S. healthcare reform initiative.

Authored by Dr. David K. Song, M.D., Ph.D., an equity analyst covering the healthcare sector within the asset management group at Rockefeller and Company, the central thrust of the white paper is that the intense US healthcare reform debate has temporarily pushed down valuations of healthcare stocks. That, coupled with strong global demographic trends, has created a promising opportunity for long-term investors in the healthcare sector.

According to the white paper, as emerging societies continue to become wealthier, they will likely spend more money on medical care as their populations seek to live longer and healthier lives. Moreover, as the storm cloud of healthcare-reform uncertainty hovers over Washington, short-sighted investors are missing an opportunity to participate in a sector that is expected to grow in excess of global GDP for the foreseeable future.

Other key highlights of Rockefeller and Company's healthcare white paper include:

• Healthcare stock valuations are trading at or near multi-year lows, coinciding with the uncertainty of healthcare reform; healthcare stocks are trading currently at a 44% discount to the general market, a far larger discount than even during the Clinton administration's effort to reform healthcare.

• Balancing all the political considerations, the most likely legislation to be enacted will essentially insure well more than 30 million currently uninsured individuals, without doing much in the way of restraining costs.

• Investors also have some potential upside in the sector even if no healthcare reform bill is signed.

• Regardless of the outcome of healthcare reform, compelling secular trends in the healthcare sector remain fully intact:

1. Rising prosperity in emerging markets should drive the demand for healthcare.
2. Even though governments in developed countries are concerned with rising healthcare costs, the pace of healthcare spending in developed markets is expected to continue above GDP growth, given aging populations and the increasing prevalence of chronic conditions such as obesity, diabetes and neurodegenerative disorders.
3. Continued technological advances in the life sciences are key drivers for the sector. Importantly, continued incentives for medical technology in developed countries and strengthening intellectual property laws in emerging markets only help to fuel already robust innovation.