#Market Strategy — 21.09.2021

Health is Wealth

Our 2021 investment themes Q4 update

Theme 1


Medium-term, Medium risk

  • The COVID-19 pandemic has refocused spending on healthcare, and is spurring innovation in drug development and diagnostics.
  • Long-term growth drivers remain ageing populations, the need to combat the rise of “lifestyle” diseases such as obesity, and a greater focus on prevention versus treatment of symptoms. Lockdowns have focused attention on the importance of mental health, a poorly-treated domain with huge negative economic and personal consequences.
  • New technologies boost healthcare productivity, with fast growth in telemedicine and Artificial Intelligence that improve diagnostics and the identification of drug candidates. 


Revolution, not evolution in healthcare

“Necessity is the mother of invention”: nowhere has this adage been more true over 2020-21 than in the field of healthcare, with the development of diagnostic tests, effective treatments and vaccines to combat the spread of COVID-19 and its many variants.

Renewed public spending focus on Healthcare: the necessary boost to public spending on healthcare will have long-lasting effects on the delivery of effective healthcare globally.

In the US, the Biden administration is set to unleash significant government spending across the healthcare sector – focused on addressing the inequality of healthcare provision across the US.  The adoption of far more digitally enabled healthcare services covering medical records and telemedicine will continue to be rolled out throughout 2021.

This will boost the need for healthcare and cloud computing to collaborate far more closely in delivering better healthcare, including remote medical services. Indeed, there is already evidence of accelerating cloud computing and cybersecurity spending at hospitals and other medical providers. This will help to ensure high-quality access to healthcare across the US and ultimately globally.

Healthcare in an ageing population: globally, the number of older people (currently at 703 million) is expected to more than double over the next 30 years, reaching 1.5 billion people in 2050. As a share of the world’s population, the number of people aged 65 or over is projected to increase from 6% today to 16% by 2050. A person aged 65 years in 2015-2020 is expected to live, on average, 17 more years. By 2045-2050, that figure will have soared to 19 years. In 2050, life expectancy at age 65 is projected to rise by almost 24 years in Australia and New Zealand.

The challenge is to provide better care, at lower cost: as populations age, healthcare is likely to become a bigger share of total spending. Companies that address age-related diseases should benefit, along with innovative businesses that provide technologies and new solutions to provide better care at lower cost.

Secondly, demographics will be a key driver of structural shifts in consumer spending. Today, people over 60 contribute to about half of all household spending in Japan versus approximately 13% for the under 40s. As spending power shifts to older households in Western economies, companies seeking growth will need to cater to their specific demands.

Key medical megatrends: Robotics, Nanotechnology, Genome Sequencing, Healthcare Trackers, Biological Engineering , Bioinformatics, Neuroscience and Medical Devices.


Better health outcomes, lower costs

  • Wellness and prevention of illness at the heart of achieving better health outcomes, at lower total costs. This includes targeting lifestyle changes (diet, exercise, sleep, stress) in a more holistic approach to health as well as both physical and mental wellbeing.
  • More numerous and better-targeted treatments: more novel drugs are being developed and approved today, thanks to the use of Big Data and Artificial Intelligence techniques in both the diagnosis and identification of promising drug candidates for further research.
  • Multichannel service delivery: just as in Retail,  COVID-19 has boosted the take-up of telemedicine solutions, including online/video medical consultations.


Technology drives healthcare productivity improvement

Shifting focus from healthcare to health: the aim is to detect potential health conditions earlier via proactive diagnostics and wearable sensors, then to treat medical conditions at an earlier stage and finally to monitor and adapt treatments over time, to better help consumers and improve outcomes at a lower cost for the healthcare system.

Data and platforms a key component: collection, storage and analysis of more comprehensive data about a patient’s health is the essential infrastructure necessary for delivering the healthcare of tomorrow. Comprehensive diagnostics using this rich patient dataset will allow for better and earlier diagnosis of serious health conditions, and enable earlier, better targeted, and more effective treatments.

Focus on well-being: Western medicine needs to move away from the classical drug treatment model towards a focus on physical and mental wellness and well-being, thus targeting prevention of medical conditions rather than just the treatment of symptoms when the conditions arise. This means more focus on underlying causes of health issues as opposed to treating the resulting symptoms, via a more holistic view of lifestyle, diet and exercise as well as a greater focus on avoiding undue stress and thus better mental health.

Telehealth is here to stay: COVID-19 created a need for remote consultations of doctors via video conferencing, outside of the classical clinic or doctor’s surgery/office setting. According to McKinsey, a consultancy, the number of patients using telehealth jumped from 11% to 46% in 2020, with this growth likely to continue.

Unsustainable healthcare inflation: how can we address the swelling cost burden on healthcare systems, whether largely private, and funded by insurance (as in the US) or public (as in Europe)? In the UK, for example, it costs three times more to look after a 75-year-old and five times more to look after an 80-year-old than a 30-year-old. In the US, average health spending per person rises from under USD3,000 in the 18-44 age range to USD11,316 for those aged 65 and over.

The challenge is thus twofold: not just extending people’s total lifespan, but more importantly, a) extending their number of “healthy life years”, while b) curbing the cost of healthcare provision for retirees.

Focus on key lifestyle choices: outside of the obvious medical treatment regimes, focus on “nutraceuticals” (foods with health properties), exercise equipment for better fitness, sleep aids.