Wellness, a high-growth market brimming with opportunities
Wellness has been an up-and-coming investment theme in recent years. Reducing the risks of ill health and promoting good health now rank among people’s top priorities. We believe that the pandemic has accentuated this trend as people become increasingly aware of the role our bodily condition plays in maintaining our resilience.
Agathe Bouché Berton, Analyst – Commodities, Chemicals, Healthcare
$1.5 trillion wellness market growing at a rate of 5-10% annually
We firmly believe this theme will provide investment opportunities in 2022 and further out, through innovation and a gradual but structural reallocation of consumer spending.
Powerful underlying trends will drive expansion of this market, encompassing not just healthcare and nutrition but also sport
Golden age for medical innovation nowhere near over
The development of biotechnologies is unlocking tremendous progress in areas with substantial therapeutic needs. These selective new therapies are bringing closer the prospect of personalised patient treatments. Immunotherapy is revolutionising standard oncology therapy. Messenger-RNA vaccines have helped to counter the pandemic. And more recently, new hopes have been raised of a treatment for Alzheimer’s disease.
In 2020, such revolutionary therapies accounted for 42% of marketing approvals in the US. New avenues will open up over the next decade through the emergence of therapies based on RNA (messenger and interfering), bispecific antibodies, cell therapies and gene editing. In our view, new marketing approvals are set to hold steady, above average levels, out to 2025. This cycle of innovation will support annual growth in the drugs market of 3% to 6%, which exceeds the prospective pace of expansion in the rest of the economy. Our preference lies with companies active in next-generation therapies, which offer superior estimated returns.
Digitalisation-led revolution in medicine
Novel and increasingly online technologies are relentlessly unleashing new medical advances. They have raised the prospect of the biomarkers critical for our health being consistently monitored remotely and are revolutionising the daily management of chronic diseases such as cardiovascular illnesses and diabetes. Use of these techniques is still only in its infancy. In addition, the pandemic has speeded up the shift towards digitalisation. Telemedicine has demonstrated its effectiveness by maintaining access to healthcare. In our view, the sector has a bright future, and we fully concur with McKinsey’s figures estimating the market will be worth $250 billion in the US (up from $10 billion in 2020). Challenges remain, especially on the regulatory front, where a lighter touch is needed. But the market has already established itself, and we estimate its annual growth potential at between 20% and 30%.
Our spending habits are embracing more natural products
This structural shift is evident both in our diet – as people seek to achieve a greater nutritional balance – and in cosmetics. This market represents a long-term opportunity, with annual growth of between 5% and 7% forecast for key players in the ingredients sector, which is set to continue into 2022.
Sports poised to benefit from shift in household spending
Sport is essential for us to stay in good shape. Making it part of our daily routine is a crucial element in looking after our health. The sector is constantly evolving, with new technologies the driving force. Connected devices can now help us track our physical performance and progress and measure the impact on our bodies. We firmly believe the sports industry (including material and equipment, nutrition and online sports) will be a force to be reckoned with, as households in developed countries adjust how they spend their money; as purchasing power increases in emerging markets; and, in the near term, as pandemic-related restrictions are lifted. We expect the sector to outpace global GDP by a factor of two to one.
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