Healthy Longevity: Investing in healthy aging
Life expectancy is increasing in many countries around the world. This presents societies with numerous challenges. However, demographic change also offers opportunities – for companies that offer products and services for an ageing population and for investors who participate in the megatrend.
Author: René Nicolodi, Head Equities & Themes
Population ageing is particularly pronounced in Europe, East Asia and North America. Ageing brings with it many challenges: for individuals, maintaining health in old age is a priority, while for societies, research in this area and corresponding services are important. In addition, the question of how to finance these concerns arises.
The topic of ‘healthy longevity’ primarily encompasses two trends that are likely to become more pronounced in the future:
- The demographic trend is characterised primarily by the ‘baby boomer’ generation, which is growing into retirement age.
- This wave of retirements is likely to put pressure on public budgets first, and later on private budgets as well. Even today, the mandatory retirement pension systems in many countries are structurally deficient or it is foreseeable that they will be in the future as well. This is because spending is likely to increase while income from the taxation of the ‘baby boomer’ working population will fall.
Societies will have to react to these developments. Politicians will have to take responsibility, as will companies and individuals. Ideally, institutions and individuals will prepare for this in good time – with the aim of strengthening the health and resilience of the state, society, companies and individuals.
Focus on individuals
A major impact can be expected at the level of the individual – not only through behavioural changes such as more exercise and healthier nutrition or through a better range of medications for treating illnesses. Innovative companies are already developing new products, for example in the field of diagnostics or electronics, that are intended for use in the home. They are designed to support a longer, self-determined life. Innovative financial products geared to the needs of older people and social networks that counteract loneliness in old age are also key elements of such offers.
The approach to supporting a longer, healthy and self-determined life is to be understood comprehensively. Accordingly, companies have many options for developing products and services that make a positive contribution to the topic of ‘healthy longevity’.
These can be assigned to various UN Sustainable Development Goals (SDGs), as they address several challenges posed by demographic change. The goals of good health and well-being, decent work and economic growth, industry, innovation and infrastructure, and sustainable cities and communities are particularly relevant.
Society as a whole benefits
Products and services in the area of healthy longevity should pay off for all stakeholders: society should be better able to cope with the challenge of demographic aging. Individuals could enjoy a healthier and more productive old age. And investors should benefit when they invest in providers of healthy longevity products and services.
Reliable estimates of the size and growth rates of the healthy longevity market are not yet available. Since the number of people over 65 worldwide is expected to double in the next three decades, the prospects for above-average growth are, in principle, very good.
From today's perspective, the main risk to realising this growth lies in the macroeconomic conditions. These could deteriorate structurally if we do not succeed in reducing the costs of health and care for the elderly and maintaining the productivity of the ageing population and using it sensibly for longer. From the investor's point of view, it is important to choose companies whose products and services contribute to maintaining health and supporting a self-determined life in old age. Such companies not only satisfy the needs of consumers, but also add value for society and the state.
