CHICAGO: Edelman has issued a special Trust Barometer Report projecting that investors will continue to see healthcare as an attractive sector even though they think healthcare companies don’t communicate effectively.
More than two-thirds of investors say healthcare companies have communicated poorly, and 61% believe that most healthcare companies are unprepared to change that, according to a survey of 225 investors in November and December 2021 in the United States, the United Kingdom and Canada.
Seventy-eight percent of respondents also said that their firm would not invest in companies that do not provide sufficient operational and/or performance information.
“That tells us right out of the gate that your corporate communications — whether that is corporate, whether that's investor or whether that's your [environmental, social and governance] — are really important to ensuring that investors have the access to the information they need to have conviction before making an investment in your company,” said Shannon Susko, managing director and co-head of strategic situations and investor relations and head of healthcare at Edelman Smithfield, which focuses on financial communications.
Still, 78% of investors have increased their allocation in healthcare during the COVID-19 pandemic, and they find the pharmaceutical and medical devices and healthcare equipment arenas especially attractive, the report states.
“Healthcare has always been very well insulated as a sector and had strong performance both in good and down economies, and I think we see that reflected through this data,” Susko said.
Nearly 90% of investors also expect that healthcare companies will be able to innovate at a faster pace, judging off what they accomplished during the pandemic, the report states.
The fast development of the COVID-19 vaccine was a “galvanizing moment,” Susko said. “Investors believe that the speed and pace of the innovative sector has increased from the pandemic, and they believe that increase is at least going to stay as long as we are endemic.”
To set themselves apart in this hot sector, healthcare companies must provide “clear and consistent” investor relations; a strong, multi-channel communication strategy; performance updates; and consistency in the use of the channels to provide access to clear information, Sukso said.
“We want to make sure that companies we are able to help are prioritizing their communications, that they are consistent in those communications,” Susko said.
The study also found that:
- Investors use five to six sources, including a company’s website and investment portfolio, to assess potential healthcare investments.
- Eighty-four percent of respondents said that before investing in a healthcare company, they must trust that the firm is taking proactive action to have a positive impact on society.
- More than two-thirds of investors said strong leadership and a clear vision for the future are most important to building trust in a healthcare company, second only to financial performance.