The longevity of health and wellbeing investments
The pandemic has accelerated many of society's health and wellbeing issues and structural trends that were already in existence pre-COVID. Private capital can play a role in helping grow the companies that are working to solve these global problems.
The global challenges
Less than half of the world's population is covered by essential health servicesi, and over 50% of working adults are excluded from formal financial servicesii. The mental health crisis has significantly worsened as a result of COVID, with one in four people affected by a mental or substance issue at some point in their lifeiii. Unhealthy lifestyles continue to pose challenges, with 1.9 billion adults overweight or obeseiv – a problem now not limited to the developed world alone.
The United Nations' Sustainable Development Goals (SDGs), launched in 2015 and signed by 180 countries, represent a roadmap for addressing the world's most important challenges. They include goals focused on health and wellbeing, quality education, financial inclusion and many others.
The investment opportunities
Investors can map their portfolios against the 17 SDGs, and can look for opportunities to allocate capital specifically to companies whose products and services are helping to achieve these goals. Under the health and wellbeing theme, subthemes include: physical health and wellbeing; mental health and development; nutrition and resources; and financial health. These four growth areas not only represent real problems in society, but also opportunities for investors in the long term.
James Gifford, Head of Sustainable & Impact Advisory and Thought Leadership at Credit Suisse, highlights artificial-intelligence diagnostics, telehealth, vaccine development and medical devices as some of the physical-health sectors of interest for investors. As an example, the women's health technology market is expected to reach $50 billion by 2025, up 207x from 2019 levelsv.
In the online mental health market (projected to grow by 14.6% p.a. to reach around $4 billion by 2025vi), he identifies startups looking at prevention, treatment and online counseling; and education technologies and retraining for workers disrupted by COVID.
Within the nutrition and resources sector, he says many companies are developing healthy foods and healthy-lifestyle solutions. Access to healthy foods could be worth more than $2.3 trillion a year by 2030vii.
And in financial health, companies are responding to COVID-related job losses by providing access to new low-cost fintech for microfinance (expected to grow 13.8% p.a. between 2020-2027viii), micro insurance (expected to grow 13.5% p.a. during 2020-2026ix) and other financial solutions.
The investment benefits
Gifford says private equity, venture capital and private debt are key to channeling capital to the SDGs. These private markets directly fund innovative companies' balance sheets, empowering management teams to commercialize and grow business models faster than they otherwise could.
Investing in these companies can contribute towards the long-term advancement and democratization of global health and wellbeing. As financial returns grow for investors, so too do the positive societal outcomes.