The future of healthcare

The future of healthcare

Public spending on healthcare is set to swell inexorably over the coming decades as seen in the high growth pace of developed markets.

POSTED ON 30 MAY 2019

Is healthcare set to grow?

As of 2015, Japan spent 10% of their GDP on healthcare, which has grown 50% from 2000 to 2015.

Is healthcare set to grow?

Growth of Healthcare Spend in Developed Markets from Year 2000 - 2015

Source: Citi Private Bank

This is underpinned by unstoppable trends rooted in demographics:

Ageing population

The origins of today's ageing populations lie in decades-old patterns of improving life expectancy and deteriorating fertility.

1. The world's population is ageing at an unprecedented rate.

Around the globe, there are almost one billion people aged 60 and above - more than at any other time in human history, and by 2050, that will DOUBLE.

The world's population is ageing at an unprecedented rate

2. Illness and chronic conditions become increasingly prevalent with advancing years.

Older populations mean significantly higher demand for healthcare treatment, as elderly households spend more on healthcare.

Healthcare share of household consumption

Source: Citi Private Bank

Growth of the middle class

Belonging to the middle class means spending more on education, entertainment, taking the occasional holiday, owning a smartphone and of course, spending more on healthcare.

1. At a global level, we are witnessing the most rapid expansion of the middle class the world has ever seen.

By 2020, the middle class will become the majority of the global population for the first time ever. We are on pace to add another billion in seven years and another billion by 2028.

The world's population is ageing at an unprecedented rate

Middle Class = Households between US$11 and US$110 per person per day (pppd) in 2011 purchasing power parity (PPP) terms

2. 88% of the next billion entrants into the middle class will be in Asia.

By 2030, Asia could represent 2/3 of the global middle class population.

Healthcare share of household consumption

Source: Brooking's Institute

What's the impact on Emerging Asian Markets?

Emerging Asian Markets still have low healthcare spending compared to the developed world. However, the gap is closing - most Asian markets have seen at least double-digit growth in healthcare spending as a percentage of GDP between 2000-2015, with Korea and Malaysia leading the way.

Health Spend in 2000
Health Spend in 2015

Healthcare Spending as Percentage of GDP

Source: Citi Private Bank

Where do opportunities lie?

As a result, a world with increasing longevity and growing middle-class spending will have implications for healthcare in the future.

Medical Advancement

MEDICAL ADVANCEMENT

With a growing amount of economic output likely to be devoted to treating and supporting the elderly, we see growth potential for healthcare, both medical and services, as well as housing and other forms of support.

Companies that develop innovative treatments for some of old age's most prevalent illnesses such as cancer, Alzheimer's disease and osteoporosis, to name a few, may offer attractive prospects.

Medical Advancement

"SICK" CARE TO "HEALTH" CARE

Today, most conditions are identified only after they have developed and produced symptoms. However, tests that can identify a person's genetic predisposition to particular diseases are becoming increasingly available, driven by the development in genomics, potentially allowing for prevention and early intervention.

Wearable technologies, such as smart watches, are also helping to give early warnings on health and fitness issues, as well as monitor existing conditions and events.

Source: Citi Private Bank

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