Global Healthcare sector set to benefit from aging demographics and M&A

April 23, 2018

Healthcare Leaders Income ETF  

Published by Harvest Exchange Traded Funds

As the world’s population gets older, Healthcare stands out among the sectors that will benefit both directly and indirectly from the ageing demographic.

That is because older individuals typically make greater use of healthcare products and services – ranging from laboratory testing, drugs, therapies, hospitals, and long-term and managed care facilities.

In fact, innovations in healthcare, facilitated by research and development have contributed to increasing longevity, which in turn provides the impetus for further growth in the healthcare sector.

To put the potential demand for healthcare products and services in perspective, the United Nations (UN) surmised that “the population aged 60 and over is growing faster than all younger age groups” across the globe. This trend is established in developed countries such as Japan, Germany, Italy, France, the United Kingdom, Canada and the US; and is a growing phenomenon in the emerging markets, particularly China.

Older adults, according to the UN, currently make up 21% of the world’s population, and are expected to reach 33% by 2050. In Canada, Statistics Canada predicts that nearly one in four Canadians will be over 65 by 2031.

As a result, global healthcare leaders are expected to experience sustainable growth over time, spurred by increasing demand from an aging population.

In addition to prescription and over-the-counter drugs, health care companies involved in a myriad of activities such as pre-clinical and clinical laboratory services; research; pharmaceutical, medical device and biotechnology industries; the development of novel drugs and therapeutics; and even health insurance providers are expected to benefit from the demand for healthcare products and services.

Growth in the sector is expected to result in industry consolidation which is already accelerating. According to Bloomberg, first quarter M&A deals in Healthcare are at a 10 year high as companies generating abundant free cash flow and overseas cash repatriation seek acquisition targets. This trend has continued through early April 2018 with a large acquisition announced by Novartis coupled with several pending mergers in the insurance and managed care sectors, while speculation of bio-pharma mega-mergers is also percolating.

The Healthcare Leaders Income ETF (HHL:TSX) invests in 20 global large-cap healthcare companies with the aim of generating capital appreciation and income for its investors.

Click for more information on the Healthcare Leaders Income ETF.

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