The world is undergoing
profound demographic shifts.
In every region of the globe
people over 65
are making up an ever greater
share of the population.
By 2050, over a quarter of some
regions' populations may be seniors.
At the same time,
hundreds of millions of people
are joining the global middle class,
mostly in Asia.
These developments have far-reaching implications
for economies and societies everywhere.
One industry that we think
may potentially benefit is healthcare.
With advancing years, the need for prevention,
cures and wellness naturally increases.
Likewise, with greater wealth
comes more spending on healthcare.
At Citi Global Wealth Investments,
we believe increasing longevity
and the growth of the Asian middle class
represent unstoppable trends
which may fuel healthcare demand for decades to come.
Healthcare innovation is
driven by greater spending
on research and development.
Research and development
spending has grown consistently
through economic cycles, a trend
that seems set to continue.
We believe that certain
areas within healthcare
may be well placed to
benefit from this trend.
Biologics are complex,
cutting edge treatments
made from living organisms
rather than chemicals.
With cancer and old age illnesses increasing,
biopharma developments efforts
are focusing more and more on these innovative drugs.
To create new biologics and other treatments,
many big drug companies are outsourcing key parts
of the development process.
We expect these third party life science tools companies
to benefit from an ongoing shift to outsourcing
over the next few years.
We also see growth coming from preventative
and wellness-oriented healthcare,
including value-based care and wearable technologies
such as watches and other monitoring devices.
Just as all these areas
could help improve patient outcomes and save costs,
we think they could help drive investor outcomes.
Risks to our view include expensive development delays,
regulatory hurdles and government price controls.
We believe, though, that demand for healthcare
will likely grow faster than the economy over time.
We see a compelling case for portfolio exposure
to this source of long-term growth.
Historically, healthcare is the least cyclical
of all economic sectors,
whose earnings have held up most in recessions.
Major pharmaceutical firms
have routinely raised their dividends
through economic recessions
and continue to grow their profits.
Fast growing, earlier stage healthcare firms
have the potential to perform strongly
during recovery periods.
We see possibilities for gaining exposure
to this vital industry for the years ahead,
including strategies from specialist managers.
As with any strategy,
it's important to also consider the risks.
The prognosis for healthcare looks positive.
Is your portfolio taking the prescription?