Ageing population: healthcare opportunities

Over the next few weeks, we will introduce how the longevity and consumption power of a globally aging population provides opportunities for investors who can see beyond the demographic statistics.

In the first article we highlight demographic trends that will affect the healthcare sector.

One of our species’ greatest triumphs has been to extend our lifespans. Larger groups of people with more productive lives have accelerated economic and societal development over the last millennium.

Yet, even since 1960, life expectancy has increased by twenty years across the globe – adding more than a quarter more lifetime onto the average individual. Even more dramatic increases have occurred in the world’s two most populous nations – 32.7 years in China and 27.6 in India.

Ageing populations are a global phenomenon

In 2017, the UN estimated there were 962m people aged 60 or over in the world, comprising 13% of the global population¹. They also noted that this population was growing at 3% each year, faster than all other age groups. This means the number of older people is likely to double by 2050.

Contrary to common expectations, this demographic shift is not only in developed regions. The accelerating shift of the size and proportion of older generations is occurring across both emerging and developed markets.

As of 2017, Japan has the largest proportion of people over 60 and is the only country in the world where this crosses 30%. However, by 2050, all regions of the world except Africa are forecast to have nearly a quarter or more of their populations at ages 60 and above, including China, Thailand, Mexico, Brazil and Russia.

Longevity drivers

Thus far, increasing longevity has been due to primarily environmental factors. Improvements in sanitation, developments in antibiotics and vaccines, lower infant mortality and fewer births, and better working conditions have all contributed to global increases in life expectancy.

However, as we explored in our Beyond 100: Whitepaper, Video, and Podcast, the next phase of increasing longevity will be shaped more by our ability to modify the fundamental biology of the human body. Scientists are working on ways to re-engineer our biology, accelerated by the emergence of deep learning in clinical trial research to dramatically improve drug development. Within a couple of decades, this could mean widespread life expectancies well beyond 100 years.

Larger healthcare sector

For the global population to continue to extend lifespans requires more, and better, healthcare. All countries face major challenges to ensure that their healthcare systems can both cope with and best support this demographic shift. This is set to produce a double dose of market growth.

Firstly, achieving more widespread longevity will be due to increased spending on healthcare – most significantly as income levels and government spending rise in lower income countries.

Yet as we live longer, even more healthcare spending will be required. A majority of healthcare spending occurs in old age, and healthcare costs swell with older age, especially as chronic and age-related illnesses also increase.

Overall, a growing aging population will drive a multi-decade growth in the global healthcare market.

Investment ideas

So, how can investors position themselves to capture the health facet of the ageing populations theme.

Primarily, this can be achieved through exposure to companies producing the pharmaceuticals and using biotech to address ageing and rising levels of illness. Investing around health-related products and services that will support those living longer to lead comfortable and active lives is another avenue.

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