The Health and Wellness Sector was a Surprise Coronavirus Winner

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

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During the pandemic, the headlines and attention focused on big tech companies. The new acronym recently coined by Goldman Sachs, FAAMG, reflects the true winners from the pandemic - Facebook, Apple, Amazon, Microsoft and Google.

Another notable sector that gained a lot of attention was the biotech industry due to the race for a vaccine. But biotech that deals with a host of other issues, such as mental health, also saw an incredible surge in investment. The health and wellness sector generally has been a surprising beneficiary of the COVID-19 outbreak. 

As we gradually emerge from the shadow of the pandemic, the narrative of people gaining weight and suffering from mental health issues still looms large. These were major issues even before the outbreak and will remain after. The rise of obesity has been a concern for decades, but lockdown and COVID-19 concerns have caused a spike in weight gain and mental problems. 

A survey by APA Stress in America in February 2021 found that 61% of US adults experienced undesired weight changes, with an average gain of 15 pounds. In July 2020,  a study by the Kaiser Family Foundation (KFF) reported 53% of US adults saying the pandemic has had a negative impact on their mental well-being.

The success of the health sector indicates a positive long-term shift

However, it’s not all doom and gloom. The influx of funding and the success of health apps, companies and start-ups during the pandemic is a sign of a general shift toward health. More people are seeking help, and rising investment in the sector will benefit the public for a long time to come.

The fitness industry is worth an estimated $100 billion, and this has recently had to shift online, where it has boomed. Even sales of exercise equipment have surged, with sales of resistance bands up 347% and dumbbells up 725%.

There are around 250,000 apps devoted to fitness, with platforms and streaming helping millions more. A good example is the streaming workout platform Neo U, which saw its average daily subscribers shoot up by 600% in the first week of lockdown. Another example is Beachbody, which has been around since 1998 but saw signups rise by 200% for the same period.

Digital health companies, generally, have been in incredible demand. One survey found 70% of start-ups reporting revenue above expectations. According to figures published by MobiHealthNews, in 2020, $13.8 billion was invested in the digital health sector compared to $7.2 in 2019.

Companies dealing with mental health have been particularly in demand

After a year of job insecurity, lack of social contact, and concerns about the virus itself, mental health has been thrust into the spotlight. According to the National Center for Health Statistics and the US Census Bureau’s Household Pulse Survey, 41.1% of adults in America reported symptoms of depression or anxiety disorder.

Consequently, demand for mental health solutions has skyrocketed. A survey in mid-2020 by the Business Group on Health found 69% of large employers already provide access to various online mental health resources, and that number will rise to 88% by the end of 2021.

A particularly popular sector has been biotech. In the UK alone, biotech saw investments rise from £1.3 billion in 2019 to £2.8 billion ($3.8 billion) in 2020. It’s estimated over $13 billion was invested in biotech companies worldwide last year.

R&D spending in the biotech industry was already increasing. US consultancy firm BDO found investments in the sector jumped 22% from 2018 to 2019. The rise continued, with S&P Global Market Intelligence showing biotech leading the healthcare industry for the first half of 2020. These trends are expected to continue.

An excellent example of how pandemic demand will lead to long term benefits is Canada-based biotech firm Cybin. The company was founded in 2019 and was already making significant progress when the pandemic happened.

Cybin’s CEO Doug Drysdale says, “There was already a serious rise in mental health issues before the coronavirus arrived. The company was founded after seeing the effect of mental suffering on loved ones and we wanted to help those struggling to find effective medication. 

“Our ambitions were to revolutionize mental health, and thanks to an amazing science team and market interest, we were already making incredible progress. Then COVID-19 arrived, and our entire industry saw an even greater surge in investment.

“Like many companies, Cybin was able to expand rapidly, thanks to extra funding. We raised C$88 million and went public at the end of 2020. The additional financing has allowed us to achieve a lot in a very short period. We completed 20 pre-clinical trials for the development of our proprietary molecules, filed ten patent applications, and now have over 50 proprietary molecules.”

Drysdale sums up the remarkable situation: “The pandemic has led to a lot of suffering, but it has shifted public attention to a sector that was in dire need. Not just to those of us trying to help millions with mental health issues, but to the health and wellness sector as a whole. 

“Cybin, and companies like us, have been able to make great strides forward, and a large part of that has been due to the pandemic. The beneficial effects of the products we are now able to bring to the market will be felt for years to come.”

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.