The Technology Investment Network (TIN), best known for its annual ranking of our top 200 high-tech exporters, has released a new report focusing on New Zealand's health technology sector.
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The MBIE, NZTE and Consortium for Medical Device Technologies-sponsored report, out this morning, was authored before the Covid-19 outbreak.
TIN principal Greg Shanahan says it was put together as part of an ongoing series of initiatives to attract more investment into the NZ technology sector - and to alert locals to the sheer scale of the sector (see graphic below).
But, regardless, it serves as a useful field guide to the health tech companies that face the biggest opportunities - and threats - from the novel coronavirus, and the post-lockdown world we'll eventually emerge into.
"The lockdown is obviously disruptive for all businesses as is the global economic slowdown," Shanahan tells the Herald.
"However, those larger health tech companies with established customers and strong recurring revenue will be less affected," he says.
"For a number this is a very significant immediate opportunity with, for example, Fisher & Paykel Healthcare reforecasting upwards because of strong demand growth."
East Tamaki-based F&P Healthcare - which specialises in respiratory products - said it had been classed as an essential service and would continue its operations while most of the country was in coronavirus lockdown.
Coronavirus: Vitamin C flying off the shelves, but does it boost immunity?
Coronavirus: Pharmac working to minimise supply issues
F&P Healthcare shares volatile amid sharemarket meltdown
Its NZ-listed shares have been volatile during the outbreak, but have generally tracked upwards and recently hit a record high.
In a March 17 trading update, chief executive Lewis Gradon said a lower New Zealand dollar and increased demand resulting from the outbreak would lift its earnings by a range of $275-$280 million this financial year, which is about to end on March 31, from a previous guidance of $260-$270m.
F&P Healthcare shares were trading at a record high of $30.95 on April 1 and were recently trading at $27.67 - which still represents an 81 per cent gain for the year, and gives the company a market cap of $15.8 billion, making it the most valuable on the NZX.
As a point of contrast, Auckland International Airport, which has historically rubbed market cap shoulders with F&P Healthcare, has seen its shares tumble by a third since tight border controls were imposed and many flights axed, for a recent $6.6b valuation.
But the further down the health tech food chain you go, the more challenging the situation becomes.
"The challenge will be for early-stage and pre-revenue companies to be able to manage cash flows and/or attract investment to be able to survive. It is critical that we can sustain promising early-stage companies to take advantage of the recovery," Shanahan says.
On the flipside, the TIN boss sees the "new normal" - many elements of which could persist post lockdown - as potentially fertile ground for health tech.
"In the longer term the changes accelerated as a result of Covid-19, such as telehealth, the move to provide more healthcare in the community and the use of digital technology to better manage the provision of healthcare more broadly, will create major opportunities," he says.
Shanahan says Auckland-based startup The Clinician, which has repurposed its patient outcome measures platform to manage the wellbeing of communities dealing with Covid-19, is an example of an early-stage business that could thrive in the new environment.
So is Henderson's Whānau Tahi, which is eveloping a platform for directing Covid-19 healthcare needs
For others, it could be a second chance. Auckland-based Orion Health experienced rapid growth in the US - the principal market for its patient record management software during the "Obamacare" era and associated federal stimulus spending. That dried up during the early days of the Trump administration, contributing to a cash crunch that ultimately saw Orion sell part of its business offshore and delist from the NZX. Now, government aid is very much back in fashion.
Orion is now working with global clients to deliver a comprehensive pandemic outbreak monitoring platform that allows for early discharge and safe management and monitoring of as many patients as possible at home.
And NZ-based AI avatar maker Soul Machines, which recently raised $57m, is working digital humans for Covid-19 information sharing.
But in other cases, the coronavirus' suffocating effect on sector activity outside Covid-19, and economies in general, has made life tougher for New Zealand's emerging health tech contenders.
Wellington-based breast cancer screening software startup Volpara, which is listed on the ASX, saw its shares tumble from an all-time high of A$2.09 to 81c as the outbreak hit and it issued a market warning that its business would be impacted to an as-yet unquantified extent (the stock recently recovered some ground to A$1.23.
And Brian Ward, chief executive of Auckland-based hi-tech woundcare company Aroa Biosurgery, recently told the Herald market volatility amid the outbreak had pushed out plans for a capital raise in the order of tens of millions (a non-deal investor roadshow in the New Year mooted a possible ASX listing that would raise A$50m (NZ$51.5m) at a A$300m valuation - roughly the same valuation as Volpara, at least before Covid-19 hit).
The local pharmaceutical industry is booming under Covid-19.
Dr Hartley Atkinson, managing director of Auckland-based AFT Pharmaceuticals, recently told the Herald a combination of stockpiling during the very early days of the crisis, secure supply lines and China emerging from its outbreak early meant his company was having no production issues with its cold and flu medicines.
And the "nutriceuticals" side of its business, AFT, sold $1.2m worth of its vitamin C supplement in just three days of Covid-19 panic-shopping - equal to its entire sales for the product line over the past year.
AFT's NZX-listed shares were recently trading at $4.45, up 122 per cent for the year.
Privately-held Auckland Douglas Pharmaceuticals would not reveal financials, but said it was experiencing similar trends.
And, overall, Shanahan says the sector will acquit itself well during the outbreak and the tough times ahead, which he sees as good for all of us.
"It's my firm belief that the strength of NZ's health tech sector as a whole will help provide greater resilience for New Zealand as we shift to a new way of working through this lockdown period and beyond, and be an ongoing force for good that will enable a faster recovery from the current related economic shocks of Covid-19."
TIN's key health tech sector stats
• 11% of TIN200 (top high-tech export) companies are health tech firms, generating 15.4% of TIN200 revenue
• Three health tech companies in NZ today earn revenue of more than $100m
• Health tech companies generated $1.9b in revenue, with a five-year CAGR of 9.1%
• Exports of healthcare technology accounted for $1.6b, or 87.5% of revenue
• Device companies, including F&P Healthcare, generated around two-thirds of the health tech sector's revenue
• Health tech companies had revenue growth of $92m or 8.2% of TIN200 growth
• NZ-based health tech companies employ 7636 people globally
• North America is the largest offshore market for NZ health tech companies, accounting for 37.8% of sales, followed by Europe which contributes 23.7%
• The average sector wage of $85,000 is 41.6% higher than the New Zealand average
The report can be downloaded here .