The aging population in emerging markets will unfold at a speed not yet realized by most, John Woods, chief investment officer Asia Pacific at Credit Suisse, explains in an exclusive interview with finews.asia. This will drive business opportunities and investment performance for many years to come.

With the world’s senior population set to double to more than 2 billion by 2050, and as more people age, demands for healthcare, insurance and funding solutions, and consumer and property markets will continue to grow.

«The evolution of this sector is fairly independent of the state of the world economy or political events,» noted John Woods, Credit Suisse chief investment officer, Asia Pacific. «A focus on emerging markets makes sense, given that two-thirds of the incremental number of seniors will live in that group of countries, which remain under-resourced in both healthcare provisioning and public and private insurance solutions,» Woods said.

Silver Economy

Investing for population aging was one of the themes identified in the bank's 2020 «Supertrends» report, published in May. Launched three years ago, Credit Suisse’s Supertrends focuses on multi-year societal trends believed to lead to fast-growing business opportunities. Each of the investment trends identifies opportunities expected to outperform as a result of these shifts. The updated report also considers the changes brought about by the COVID-19 pandemic.

According to the bank, the focus on the aging population is important during this time of low growth and volatile markets. In particular, healthcare remains the sector most pronouncedly affected by an aging population. The incidence of many chronic diseases increases with age, which is why a larger elderly population is linked to a disproportionate rise in healthcare expenditure.

Significant Potential

«Based on the historical trajectory, healthcare costs can be expected to continue to rise at a rate several hundred basis points above GDP growth. This requires solutions to contain healthcare costs amid such demographic developments,» Woods told finews.asia in an interview about the opportunities this demographic shift presents for businesses and investors.

Biopharmaceutical, medical technology and life sciences companies that address conditions affecting the elderly through innovative products such as immunotherapies or personalized cancer vaccines stand to benefit. Health and life insurance companies, private wealth advisors and asset managers with strong pricing capabilities, which allow the elderly to make the most of their wealth, also have significant potential.

Providers and Operators

The aging population is also expected to lead to an increase in demand for certain goods and services, Woods said. He identified consumer companies focusing on basic needs as well as the more discretionary wishes of senior consumers, such as tourism companies, beauty product companies, or manufacturers of prescription glasses and hearing aids.

The CIO also identified providers and operators of senior housing, dialysis clinics and other care facilities, as well as managed care organizations that can direct patients to the most efficient care setting as niche areas of healthcare that could also grow. 

Technology Crucial 

According to the report, medical progress should also provide more effective and affordable therapies for diseases or disorders that come with age, with technology playing a critical role in providing such solutions. Next-generation technologies, such as antibody-drug conjugates and personalized cancer vaccines, are already making great strides in clinical testing, Woods noted.

«It will be paramount that healthcare systems exploit the full savings potential from patent expiries through the development of generics as well as biosimilar products of biologic drugs, creating financial headway for innovation,» Woods said. However, some challenges remain.

The advent of the «Anxious Society» could distract from the policy needs regarding this issue, Woods said. He also noted that fragmentation into a multipolar world could stymie global collaboration on innovation.

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