Wealth Outlook 2024 - Slow then grow

93 Wealth Outlook 2024 | Unstoppable trends For investors, healthcare innovation is on sale We all share the inevitable journey of aging and more of us are farther along on that journey than ever before. According to American Association of Retired Persons (AARP), in the US alone, 10,000 people turn 65 each day. According to the National Council on Aging, nearly 80% of adults 60 and older have two or more chronic conditions. — In the US alone, 10,000 people turn 65 each day. Healthcare services consumes an ever-growing share of our household expenditures and is becoming a financial burden on many governments and societies. Reversing that tide requires better health outcomes at a lower cost of care. Within the Healthcare sector, that will necessitate a shift from the traditional approach of managing symptoms to addressing underlying causes, and from treating disease to preventing it. Innovation is leading these healthcare paradigm shifts. Exciting technological advancements are being developed and deployed across every sub-sector of Healthcare, promising transformative breakthroughs in medicines, procedures, hospital care, nutrition and preventative actions in people’s daily lives. Since the mapping of the human genome at the turn of this century, various biologics-based platforms have emerged to treat a wide array of medical conditions. Biopharmaceutical companies are leveraging these platforms and successfully advancing drugs through the approval process to finally offer hope for age-related mysteries like Alzheimer’s. We also see less toxic, more targeted and more personalized approaches to treating cancer (still the second-largest killer of people over the age of 65). Treating obesity is an example of how healthcare can change rapidly. Now, with a new class of weight-loss medications, we see lower rates of diabetes, heart disease and associated co-morbidities among its growing user base. Of course, innovation takes capital. And higher interest rates have raised the cost of financing research and development (R&D), the foundation of the innovation cycle. Higher rates and tighter capital spending, along with regulatory uncertainty and an ongoing hangover from COVID-19, weighed on Healthcare share prices in 2023. Even the remarkable success of the weight-loss drugs turned into a kind of headwind, as investors shunned (prematurely, we believe – see Anti-obesity drugs: Healthcare’s “AI” moment? box) the stocks of insulin, device and heart medication makers in the belief that demand for these solutions would decline as waistlines slim. To boot, the year marked the first earnings recession for Healthcare shares in decades. For those dialed into the twin unstoppable trends of longevity and innovation, however, the 2023 downturn has created opportunities. Many of the issues that held back Healthcare stocks are transitory, in our opinion, thus creating a favorable setup for the sector’s potential outperformance in 2024.