Investing in global health
We explore how today’s healthcare challenges are being tackled, and where opportunities may lie for investors.
What you’ll learn:Click to toggle accordion What you’ll learn:
The healthcare and well-being challenges we face today
How companies are producing solutions to healthcare and well-being needs.
How impact investing allows you to invest in these companies and solutions
Among the United Nation’s Sustainable Development Goals (SDGs) for 2030 is the aim for all people to enjoy a healthy life as a basic human right.1
Yet today we face a range of health and well-being challenges that affect our lives, families, and societies. While much progress has been made in developed countries in areas such as maternal, newborn and child health and infectious diseases, more still needs to be done in places that continue to be disproportionately affected by these issues. Meanwhile non-infectious diseases and mental health are also on the rise globally, and in addition traffic-related fatalities, and deaths and illnesses from hazardous chemicals, pollution, and contamination continue to be an issue.
Here, we examine the impact of poor health, and what investors can do to help combat it.
The impact of poor health
Around four in 10 (43%) of all deaths globally are considered premature. In 2015, non-infectious diseases, such as heart disease, cancer, diabetes, or respiratory disease, killed a total of 13 million people. 2
Achieving the SDG health targets will need investment to increase from the present USD 104 billion annually to USD 274 billion. It’s estimated that this investment would add 14 million new health workers, and build 378,000 new health facilities; and will prevent 71 million premature deaths.3
Like many developed countries, in the UK there is an ageing population, increasingly isolated and with sedentary lifestyles, growing levels of obesity, diabetes and mental health problems. The annual cost to the National Health Service from food related ill health alone is approximately £6 billion, causing around 10% of morbidity and mortality in the UK and similar to the number of deaths attributed to smoking.4
Demands from these health challenges are further stretching public services. Tightening public budgets mean that governments, communities and healthcare services are faced with increased economic and social pressures. To meet our global health targets, the UN notes that efforts need to be accelerated, especially for those regions of the world that are most impacted.
How investors can tackle health challenges
The health and well-being issues that we need to tackle can appear overwhelming – and for those who have been affected, personally emotive. Yet, there are forward-thinking companies and organisations working hard to develop products and services aimed at helping to tackle these issues.5
They’ve recognised that finding solutions to our health challenges can create strong market opportunities for growth. For example, digital healthcare is becoming increasingly popular. These companies are identifying new ways to build ‘people-powered’ technology and digital platforms that allow people to work in partnership with professionals, and take control of their health.
As investors, our money provides the capital that finances these companies. With impact investing, you can choose to invest in funds and companies that are minimising their negative contribution to our health challenges or actively addressing them.
Choosing investments for healthcare and well-being
If you want to invest to make a positive contribution to solving health challenges, you have options both in types of funds and their investment strategies. Let’s look at a few examples to explain how they work.
Some funds invest across all industries and look for companies that minimise their negative impact on the health of their employees, stakeholders, and customers. Others are more proactive about investing in stocks or bonds where the business delivers products and services that provide solutions to help people live healthier and more active lives.
For example, L&G Pharma Breakthrough ETF invests in companies that are actively engaged in the research and development of orphan drugs which combat rare diseases. Globally, there are estimated to be 7,000 rare diseases, ranging from rare cancers to metabolic disease. Among its biggest holdings is Ligand Pharmaceuticals Inc, a biopharmaceutical company, which creates or acquires technologies that larger pharmaceutical companies use to enhance or deliver their treatments.
Another fund is the iShares Ageing Population ETF that invests in companies that provide services to address the growing needs of the world’s ageing population. An example company includes OPKO, which develops, manufactures and distributes diagnostics and therapeutics for a broad range of conditions. This includes diagnostic tests for prostate cancer, cutting-edge technology for urology results, and research on influenza, uterine cancer and cervical cancer.
Alternatively, there is the Fidelity Global Health Care Fund, where the manager actively selects companies from all over the world that design, produce, or sell products and services in health care, medicine or biotechnology sectors. This includes companies like CSL Limited, one of the global biotechnology companies that creates products that treat and prevent serious human medical conditions. CSL specialises in areas such as blood plasma derivatives, vaccines, anti-venom, and cell culture reagents.
Investments, whether in healthcare or any other sector, may fall as well as rise in value and you could get back less than you put in. Healthcare is a specialist sector which is only appropriate for investors who are comfortable accepting a relatively high level of risk, as ideas and technologies within the sector can fail. Investments in this sector should therefore only make up a small part of a diversified portfolio, alongside investments in other sectors, and geographical regions.
Please be reminded that this article serves to illustrate how it is possible to invest in line with this theme. In using the funds and companies as examples, this does not constitute a recommendation to invest in these, or any other investment. Barclays has not undertaken a review of these funds, nor are they part of a Barclays Select list. If you’re not sure where to invest, you may want to seek independent advice.
Smart Investor does not offer personal financial advice. If you’re not sure where to invest, you may want to seek independent advice
Through impact investing you can combine a traditional investing approach with the aim of making a positive contribution to society.
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1 United Nations, Transforming our world: the 2030 Agenda for Sustainable Development
2 Sustainable Development Goal 3
3 World Health Organisation cost of reaching global health targets by 2030
4 BMJ Journals, The burden of food related ill health in the UK
5 Nesta, 7 wishes for the NHS on its 70th birthday