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Thematic investing in health

November 2019

Innovation for a healthier world

From big data to smart beds, technology is revolutionising our health, opening up attractive investment opportunities.

Technology is reshaping our world. Health is no exception. The pressure to develop new medicines and other health products is building thanks to the demands of an ageing and increasingly health-conscious world population.

This is giving rise to a world of investment opportunities. The healthcare IT sector, for example, is forecast to more than double over the next five years to top USD390 billion by 2024.  

What’s growing at an even faster pace is the amount of health-related data that’s being generated.

FIG. 1 Living longer
Average global life expectancy at birth, total (years)
Average global life expectancy at birth

Source: World Bank DataBank. Data covering period 1960-2018.

Having affordable genome sequencing has sparked initiatives to sequence whole populations and find the genes responsible for disease. But the largest healthcare IT players are health insurance companies such as United Health.1 For them, data is key to manage costs and improve the outcomes of their beneficiaries. Identifying high risk groups and have a physician check up on the patient prophylactically can save both costs and lives.

Another area where data can help is in preventing adverse drug reactions – the fourth leading cause of death in the US and Canada after heart disease, cancer and strokes.2 Software algorithms, such as those developed by New Jersey-based Tabula Rasa HealthCare, can help predict how patients will react to drugs, and how different medicines will interact with each other if taken at the same time. Doctors can then use the information to adjust dosage to reduce side effects or prescribe different medicines altogether. 

Such technology will become all the more important as the population ages. The United Nations forecasts that by 2050, a quarter of the population of Europe and North America will be aged 65 or over. And that is the age group that takes the most medicines: 40 per cent of them in the US and 50 per cent in the UK are on more than five drugs, according to CDC data.3 

Consumer power

Technology’s role in health is not limited to medical care. Innovative companies are responding to growing demand for tools that allow people to lead healthier lives – demand which we expect to increase further as societies become wealthier.
FIG. 2 Spending more
US health expenditure per capita (current USD)
US health expenditure per capita

Source: World Bank DataBank. Data covering period 2000-2016.

Companies like Sleep Number, a manufacturer of smart beds, play right into this growing market. Lack of sleep is linked to physical and mental health problems, yet many people aren’t getting enough sleep, and what they do manage is often of poor quality.4

The Sleep Number beds are directly linked to the user’s smart phones and have features such as automatic adjustments when you change position or warming your feet to help you fall asleep faster. There is even a snoring feature, which lifts the upper body ever so gently to free the airways.

Clean water, clean air and good quality, nutrient-rich food are also vital ingredients for good health. As concerns about global problems such as pollution and obesity grow, consumers are becoming increasingly discerning, favouring products with clear health and environmental benefits. 

Health is society’s primary concern. Diverse living situations generate different health challenges, some of which will be met by our healthcare system and others by individuals taking matters into their own hands.

Looking at health not just through the narrow lens of healthcare, but in a holistic sense helps us identify the true growth trends underlying this fascinating theme.

the pictet's health strategy

Powerful megatrends

At Pictet Asset Management, we believe growth of the health sector is underpinned by powerful global megatrends. Technological development, including big data, artificial intelligence and connected devices, is one. An ageing population is another. Consumers are increasingly knowledgeable, focused on health and hungry for an indivualised approach.

Holistic approach

Health is so much more than just medicine. The Pictet-Health strategy focuses on companies across the whole spectrum, spanning preserving health, restoring health and financing health.

Targeted and diversified portfolio

We only invest in companies whose contribution to health can be evidenced, with a scientific foundation. Our portfolio is diversified globally, and offers low correlation with traditional equity investments.