Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.
Our latest Stocktake looks at American medical technology company Edwards Lifesciences, a holding in the ‘Enabling innovation in healthcare’ sustainable investment theme. This theme aims to find companies providing step changes in the way science discovers and creates therapies, or directly in the treatments of patients themselves.
World Heart Day, observed annually on 29th September, serves as a global reminder of the importance of heart health and the urgency of combating cardiovascular diseases (CVDs). With cardiovascular diseases being the leading cause of death worldwide[1], the day – created by the World Heart Federation in 2000 – highlights the need for preventive measures, lifestyle changes, and medical innovations to reduce the burden of heart disease.
Heart disease is becoming more common as the global population ages. The number of people aged 60 and over is expected to double by 2050, reaching 2.1 billion[2]. This trend highlights the growing need for healthcare systems to adapt, and for innovations that can manage the needs of patients more effectively.
Innovation in healthcare: A key sustainable investment theme
Our Enabling Innovation in Healthcare theme highlights companies revolutionising the discovery and creation of therapies, enhancing clinicians’ ability to diagnose and treat patients more effectively. These companies span the healthcare industry, introducing new methods for drug research and discovery, and improving doctors’ diagnostic capabilities. Their innovations typically lead to better patient outcomes, including more effective treatments, improved surgical results, faster and more accurate diagnoses, and higher quality care.
Given the prevalence of heart disease, the need for healthcare innovation is vital. These advancements are not only crucial for improving patient outcomes but also for ensuring the long-term sustainability of healthcare systems. The increasing demand for healthcare services, combined with rising costs, puts pressure on governments, healthcare providers, and the pharmaceutical industry to find cost-effective solutions that deliver better results.
Innovative heart valve technologies – Edwards Lifesciences
Edwards Lifesciences, a holding within our global and US portfolios, is a global leader in both surgical heart valves and transcatheter aortic valve replacement (TAVR). By expanding access to life-saving heart valve replacements, Edwards Lifesciences has played a pivotal role in lowering mortality rates associated with heart valve disease. The majority of revenues today come from its TAVR product, which is a minimally invasive alternative to open heart surgery to treat patients suffering from a disease called aortic stenosis.
Aortic stenosis is a condition predominantly affecting the elderly and is degenerative; the condition worsens as the patient ages. The current standard of care to treat aortic stenosis is open heart surgery, however, many patients are too old and frail to undergo such an invasive procedure.
Transcatheter aortic valve replacement (TAVR) allows for valve replacement through a catheter which is fed into an artery in the patient’s leg. This can then be fed up through the body into the heart and when it is in position, a tiny balloon inflates the valve to secure it. This less invasive process has opened up treatment options for high-risk patients who previously had no viable solution, significantly reducing their risk of death from untreated aortic stenosis. In fact, the company claims that over the past decade, the TAVR adoption has doubled the treatment rate of Aortic Stenosis patients and so far it has treated over 1 million people.[3]
We have held the company in our US fund since its launch in July 2023. Towards the end of the year, we observed a decline in the share price due to a misplaced belief that high-profile weight-loss drugs would reduce demand for Edwards’ products. Given that aortic valve stenosis is primarily a degenerative disease and considering the global growth in aging populations, we saw this as an opportune moment to increase our holding and to also start a position in our Global fund.
The company disappointed the market at its latest quarterly earnings in July, explaining that it expected growth in its core TAVR product to be slower this year than previously expected. Following this aggressive sell off in the share price, the company has repurchased more than $1billion of its own shares. Our confidence in the longer-term recovery of this segment, as well as the early successes we are seeing them have in other areas in cardiology gave us confidence to add to our position at what we felt was an attractive valuation.
The growing need for investment and innovation in healthcare
World Heart Day serves as a powerful reminder of the importance of heart health and the urgent need for continued innovation in healthcare. Companies like Edwards Lifesciences demonstrate how innovation can lead to better patient outcomes, more efficient healthcare systems, and ultimately, a more sustainable future. With the world’s population aging and heart disease rates rising, the demand for innovative healthcare solutions will only grow. Therefore, investment in healthcare innovation is critical for improving global health and ensuring that healthcare systems that can manage the complex needs of older patients more effectively.
[1] The Heart of the World - PMC (nih.gov)
[2] Ageing and health (who.int)
[3] 2023 Investor Conference Webcast – December 2023
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