Healthcare investment may not reach the giddy heights of those associated with gold, but will still provide a lucrative opportunity going forward, according to Anastasia Amoroso, executive director and head of cross-asset thematic strategy at JP Morgan.

Amoroso told Arabian Business that the huge levels of innovation, fuelled in part by the current global coronavirus pandemic, is fuelling interest from investors in the sector.

“It is a very unique time. When you think about why something makes for a good investment opportunity, you want to make sure that the sector delivers earnings growth and, at the same time, the multiples that you pay for those earnings, do not contract,” she said.

“Frankly, if you looked at the healthcare, especially biotech sector, over the past five years, that has been a challenge. Earnings did not come through and the multiples did actually contract. But if I look at the next five years and take into account some of the innovation happening, with Covid accelerating healthcare innovation, with gene and cell therapies, with precision medicine, all of that is going to boost earnings growth of the sector and specifically biotech,” she added.

Amoroso revealed that they are looking at 27 percent average earnings growth for the biotech sector. “Given how critical the healthcare space is now amidst a global pandemic, I would venture a guess that the valuations of healthcare should be a lot stronger going forward as well. So we could actually see multiple rating go higher rather than lower,” she said.

“Overall, maybe not quite the gold standard, but it makes it a very attractive space within investments.”

Healthcare-related expenditure in the Gulf region is expected to grow to $89 billion by 2022, according to the latest report from KPMG.

The report, UAE Healthcare Perspectives: Who Cares, Wins, revealed spending on healthcare in the region has grown from $60bn in 2013 to $76bn last year.

In Saudi Arabia, for example, as part of the country’s 2020 budget, the government allocated 16.4 percent on spending on the sector.

Amoroso said: “There’s a really big dichotomy going on in the markets right now which are seeking out areas of growth and they’re paying a premium for it, versus some of what I would call stranded industries and stranded assets that are really having a hard time.

“Obviously healthcare investment fits into that first category. Healthcare investing is competing with investment dollars from technology investors and I would say recently, from alternative energy or clean energy investments. But I think healthcare value proposition is quite strong for growth investors.”