By David Coombs

Looking back to the height of the global financial crisis in 2008, banks were in the eye of the storm.

Unprecedented bailouts led many people to think banks had got off without any repercussions. The reality is that they have had to overhaul their businesses and are still paying the price 12 years later in the form of solvency requirements and super taxes.

Going into the crisis, banks were stalwarts of the stock market – “growth” stocks that consistently delivered strong, and reliable levels of income and steady capital growth to investors.

Since the crisis, they have become “value” stocks – more risk-averse businesses that face significant challenges and have more conservative valuations and little to no dividends to match.

A similar fate has this year befallen the hospitality and leisure sectors. Covid-19 headwinds have battered the profitability, outlook and share prices of many companies in these sectors and made them hunting grounds for investment managers who love the unloved.

While not disputing the impact on hospitality and leisure, it is in fact healthcare that is in the eye of this storm this time around.

Healthcare systems in the Western world have not coped well with the pandemic. The blame does not fall on healthcare professionals themselves – those doctors and nurses who have done everything possible to help those who have contracted the virus.

Arguably, neither does it rest with today’s political leaders – Donald Trump in the US, Emmanuel Macron in France, Angela Merkel in Germany, or Boris Johnson in the UK. Johnson has served as Prime Minister for little over a year.

It is also not a question of public versus private health systems. Countries like the US and Germany that operate mainly private or hybrid systems have struggled alongside the UK.

The problems inherent in healthcare systems have been built up under various administrations over decades. The answer has hitherto been thought to lie in throwing more money at healthcare but this has so far proved insufficient.

The real answer is to make healthcare systems more efficient and the way to do that is through medical technology, or “medtech”.

The NHS has poor IT infrastructure and lacks a central database. Technology has the potential to improve everything from the basics of administration and record-keeping, to the efficiency of surgical operations through robotics.

British medical equipment manufacturer Smith & Nephew, for example, has developed robotics-assisted technology for knee and hip replacements, reducing the time it takes to perform such operations.

Medtech also has a role to play in early diagnosis and better testing, a trend that the pandemic will likely accelerate.

Scientific equipment and testing companies that we believe might benefit include America’s Thermo Fisher Scientific and Abbott Laboratories, and Luxembourg’s Eurofins Scientific.

We also own US-headquartered Dexcom, which makes continuous glucose monitoring systems for diabetes management. When we emerge from the crisis, it is global medtech players like these that will be able to create the necessary efficiencies and reduce costs.

There will be a ripple effect too. Disease prevention is far cheaper than treatment. Government-imposed tobacco and alcohol taxes have not had a huge impact on people’s propensity to smoke and drink.

While the intention is absolutely right, it is possible sugar taxes could face similar challenges.

Companies that promote better health and diet should prosper.

Denmark’s Christian Hansen develops natural solutions for the food, beverage, nutritional, pharmaceutical and agricultural industries, while producers of plant-based meat substitutes are gaining traction.

Saving healthcare costs, creating efficiencies and promoting healthier lifestyles are the solutions to the health crisis.

Different countries will reach the same conclusion at different rates and some of the companies that stand to benefit are not listed yet, making this a long-term theme.

We can expect a lot of activity over the next five years and a lot of opportunity for investors looking for the rainbow after this particular storm.

David Coombs is head of multi-asset investments at Rathbones