Investing in your health may be a wise move
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Tuesday, 2 May, 2000 - 22:00
If you were looking for an industry that had the potential to outperform others in the immediate to near future, one industry to consider would undoubtedly be health and biotechnology.
In an era of rapid advances in medical science, an ageing population and a desire to try and achieve a “quick fix” for ailments, it would seem that this is an industry waiting for its boom.
There are a number of factors that lead one to the view that this industry has the potential to perform well.
The power of demographics drives demand. Baby boomers are reaching an age when health care is more of a priority.
Currently 12 per cent of the population in OECD countries is over sixty-five years of age. By 2030, this figure is expected to grow markedly. In Australia it will be 33 per cent and as high as 49 per cent in Germany.
The advances we have seen in the area of science and modern medicine over the last 100 years has meant that our life expectancy has risen from an average of only fifty years to over seventy-six years.
The discovery of antibiotics, vaccines, drugs for heart disease, ulcers and asthma have all contributed to this increase in life expectancy. The industry is an exciting one with reduced health care costs and the opening up of new prospects occurring all the time.
The consumer requirement for a quick fix to ailments seems to have gained pace and development over recent times. Consumers desire an instant panacea to problems and embark on a constant quest to find the drug that will provide the solution.
Companies involved in this sector are far more professional than in the past. From young, nimble businesses operating at the cutting edge of their technologies to health care innovations and pharmaceutical companies – all offer diversity to those looking to invest in the sector.
A number of companies operating in the sector also have price advantages and, often, monopolistic power for some time before they fall prey to the imitator.
The largest pharmaceutical company in the world, Pfizer and Warner Lambert group only holds 7 per cent of the global market for pharmaceutical products. The industry is fragmented and does not allow any one participants to exert an undue influence on the market.
The industry is poorly represented in this country. For anyone looking to invest in this sector it will be necessary to look at the world market. Products can often be developed in one region and then sold across the globe. Decisions on global reach need to be done from a truly global perspective.
Recently, the Colonial First State Funds Management group launched the Global Health and Biotechnology Fund. The group utilises certain criteria in establishing and managing their portfolios.
Companies whose earnings are expected to grow at a faster rate than the world economy will be targeted. Companies with short-term debt and unserviceable levels of debt will be eliminated from consideration.
CFS has had a long history of only investing in companies whose business they understand. This criterion will be brought to this fund as well.
It must be remembered that this type of investment does carry attendant risks. It is necessary for these to be assessed before any decision to invest in this, or any, fund is made.
In an era of rapid advances in medical science, an ageing population and a desire to try and achieve a “quick fix” for ailments, it would seem that this is an industry waiting for its boom.
There are a number of factors that lead one to the view that this industry has the potential to perform well.
The power of demographics drives demand. Baby boomers are reaching an age when health care is more of a priority.
Currently 12 per cent of the population in OECD countries is over sixty-five years of age. By 2030, this figure is expected to grow markedly. In Australia it will be 33 per cent and as high as 49 per cent in Germany.
The advances we have seen in the area of science and modern medicine over the last 100 years has meant that our life expectancy has risen from an average of only fifty years to over seventy-six years.
The discovery of antibiotics, vaccines, drugs for heart disease, ulcers and asthma have all contributed to this increase in life expectancy. The industry is an exciting one with reduced health care costs and the opening up of new prospects occurring all the time.
The consumer requirement for a quick fix to ailments seems to have gained pace and development over recent times. Consumers desire an instant panacea to problems and embark on a constant quest to find the drug that will provide the solution.
Companies involved in this sector are far more professional than in the past. From young, nimble businesses operating at the cutting edge of their technologies to health care innovations and pharmaceutical companies – all offer diversity to those looking to invest in the sector.
A number of companies operating in the sector also have price advantages and, often, monopolistic power for some time before they fall prey to the imitator.
The largest pharmaceutical company in the world, Pfizer and Warner Lambert group only holds 7 per cent of the global market for pharmaceutical products. The industry is fragmented and does not allow any one participants to exert an undue influence on the market.
The industry is poorly represented in this country. For anyone looking to invest in this sector it will be necessary to look at the world market. Products can often be developed in one region and then sold across the globe. Decisions on global reach need to be done from a truly global perspective.
Recently, the Colonial First State Funds Management group launched the Global Health and Biotechnology Fund. The group utilises certain criteria in establishing and managing their portfolios.
Companies whose earnings are expected to grow at a faster rate than the world economy will be targeted. Companies with short-term debt and unserviceable levels of debt will be eliminated from consideration.
CFS has had a long history of only investing in companies whose business they understand. This criterion will be brought to this fund as well.
It must be remembered that this type of investment does carry attendant risks. It is necessary for these to be assessed before any decision to invest in this, or any, fund is made.