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Silver economy: Seizing opportunities

 

August 2018

Silver economy: Seizing opportunities

On 11 July 2018, the United Nations’ World Population Day reminded us of the urgency of the most pressing population issues, with one of the most powerful being, of course, population aging. We believe that the world’s senior population will more than double between now and 2050, from slightly short of one billion to more than two billion. This will likely create plenty of challenges, but also a host of opportunities for companies accepting them.

Walking the talk

The overwhelming majority of market developments we have observed since we first published our Supertrends support our investment thesis. On the medical side, companies report strong demand growth for dyslipidemia drugs and age-related surgeries, while the demand for senior housing and care facilities is unabated. In the insurance field, we have observed a strong performance of health and life insurance-centric offerings. Moreover, the recent volume trends in both the cruise industry as well as in health & beauty-oriented consumer companies show that our “Senior Lifestyle” subtheme is also well on track.

Potential support ratio of workers (15–64) to retired persons (65+)

United Nations/DESA Population Division

Corporate activity confirms our Supertrend

What is more, we are seeing the investment case at the heart of the “Silver Economy” Supertrend validated by business development activities of companies active in the field. We would point out two transactions as a case in point: First, we recently saw Ramsay GDS make an unsolicited bid for Sweden-based hospital and clinic operator Capio. The fact that the bid was a) unsolicited and b) would significantly add to Ramsay’s geographic reach, in our view, is telltale of the scarcity value of such assets as well as the quest by companies to capture the demographic trend on a broad geographic basis. Second, we note that, according to Bloomberg, Ping An is looking to acquire Prudential’s Asian operations. Looking at the data, we are little surprised by the pursuit of this asset: Of the major world regions, countries in the Asian region will likely experience the most dramatic drop in its support ratio, which in our view is indicative of future insurance demand. These two examples are but a small subset of business development actions that in our view affirm our “Silver Economy” Supertrend.

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