Investing in health: how to take advantage of all opportunities and support medical progress
7 APR, 2025
The health sector is not only a fundamental pillar for people's well-being, but it also represents one of the most promising and dynamic investment areas in recent years. From biotechnologies to pharmaceutical companies, through the digitalization of health services, the opportunities to generate economic value by supporting medical advances are continually expanding.
In this in-depth analysis, three experts from Comgest, Robeco and Ark Invets Europe guide us through the most effective strategies for investing in health, analyzing market trends, technological innovations and future prospects. A journey that combines finance and progress, with the aim of helping investors seize all the potential of a rapidly evolving sector.
- Wolfgang Fickus, Product Specialist Europe Equity, Comgest
By 2035, it is predicted that more than half of the world's population will be overweight. The lengthening of life expectancy and the increase in obesity rates are driving up health costs worldwide. In the United States, health spending grew by 4.1% in 2022, reaching 4,500 billion dollars, or 13,493 dollars per person. Health spending currently amounts to 17.3% of the country's GDP - three times more than the 5% of GDP forecast in 1960. The picture is similar in other countries. In our opinion, the aging of the population and the increase in obesity levels are likely long-term growth factors for research and development (R&D) and innovation. The rise in costs for health systems will probably also encourage the creation of more efficient products and services. Given the essential nature of health products and services, we believe it is unlikely that macroeconomic developments (such as interest rates, wars, pandemics) can divert these long-term growth factors from their current course.
Based on our experience, spending on research and development is an essential competitive advantage for the long-term success of a healthcare company, but it is not the only one. We look for pharmaceutical companies with marked competitive advantages, based on innovation and culture, to promote sustainable growth. As bottom-up stock pickers, we believe that companies with these distinctive strengths - regardless of their sector - have the potential to achieve continuous growth over time. Rather than getting bogged down in forecasts about pharmaceutical trials, we stick to our tried-and-tested investment approach, which involves identifying high-quality companies.
Take for example the Danish pharmaceutical company Novo Nordisk. Since its foundation over 100 years ago, the company has maintained a particular focus on the fight against diabetes. With over 500 million people worldwide suffering from diabetes and nearly one in eight suffering from obesity, we believe that the Danish pharmaceutical giant Novo Nordisk will play a central role in expanding access to critical treatments for patients. The company's glucagon-like peptide-1 (GLP-1) based treatments have been shown to increase insulin and prevent glucose from entering the blood, reducing appetite. Thanks to a century of experience in insulin production, we believe that Novo Nordisk's innovative culture and commitment to research and development (R&D) have positioned it to effectively address global health challenges and generate strong sustainable revenue growth in the long term.
- Alyssa Cornuz, Co-Portfolio Manager of the Robeco Sustainable Healthy Living strategy, Robeco
The healthcare sector represents 9% of global GDP and healthcare spending in the United States alone exceeds Japan's GDP. With the aging of the population and the advancement of technology, healthcare is destined to become one of the most interesting areas for investors. In addition, the pandemic has highlighted the need for robust and sustainable health systems, and has pushed people to adopt healthier lifestyles. This shift towards better physical fitness and nutrition, along with AI that enhances diagnosis and drug development, is creating numerous investment opportunities, which can be seized through the Robeco Healthy Living strategy.
The race to discover a vaccine against Covid-19 has highlighted the pharmaceutical industry's ability to innovate quickly. However, large multinationals are facing an imminent patent expiration that could cost $180 billion by the end of the decade. Accelerating innovation through faster production cycles or through M&A operations is therefore crucial. For example, therapeutic areas with the greatest growth opportunities include oncology, immunology, diabetes/obesity and neurology, with particular attention to Alzheimer's. Moreover, let's not forget that AI could shorten drug development times and reduce clinical trial failure rates, thanks to data integration and predictive modeling, thus revolutionizing the entire healthcare sector.
The ability of AI to leverage patient data and clinical datasets can also improve clinical pathology, providing more sensitive and timely determinations of medical conditions. AI-driven biomarker tests help personalize cancer treatment, with industry leaders developing diagnostic tools. Finally, in a sector plagued by a shortage of skilled labor, the digitization of health records and the use of AI can facilitate patient care from the initial stage of the medical visit to the diagnosis, reducing the administrative burdens of hospitals.
Moving on to the consumer side, awareness of factors affecting physical health is on the rise. Data in hand, 58% of Generation Z and Millennials consider fitness an integral part of their lifestyle, and 80% of active individuals of all ages plan to maintain or increase their levels of physical activity. The active lifestyle ecosystem, which includes gyms, gadgets, dietary supplements, and nutrition, is growing. Functional hydration, once limited to sports drinks, has become trendy thanks to investments from large packaged consumer goods companies. Hyrox, a sport that combines running and strength, has gained popularity through social media, prompting sports brands to launch dedicated athletic footwear.
Despite the current volatility, where decisions from the new Trump administration have put short-term pressure on consumer companies, which import products into the United States, and in the healthcare sector (for example, vaccine manufacturers), the structural trends that support the long-term growth of the theme remain intact.
- Rahul Bhushan, Global Head of Index, ARK Invest Europe
Innovation in the healthcare sector represents one of the most transformative opportunities of our time, not only as an investment strategy, but as a catalyst for a fundamental change in the way we approach human health and disease management.
For decades we have operated within a healthcare system focused on treating diseases after they have manifested, rather than on their prevention. Today the most strategic investments in the healthcare sector are those that accelerate the shift from reactive treatment to proactive prevention and personalized care. Investors should focus on innovation platforms that target leading companies in the converging technologies of precision medicine, artificial intelligence, and multi-omic sequencing, which are redesigning the delivery of healthcare from the ground up.
This convergence of technologies is creating a powerful flywheel effect, where advances in one area accelerate progress throughout the entire healthcare ecosystem.
The main areas of investment include:
- Curative therapies: CRISPR and gene editing technologies are creating unique treatments that cure diseases rather than just managing symptoms. These therapies are disrupting traditional pharmaceutical business models, treating patient populations before patent cliffs are reached, making first-in-class treatments increasingly valuable.
- Artificial intelligence-driven drug discovery: Companies leveraging artificial intelligence are reducing drug development costs by up to 60% and halving discovery times. This efficiency accelerates the delivery of life-saving treatments and improves the return on investment in research and development.
- Multiomic sequencing: By integrating genomics, proteomics, and metabolomics data, healthcare providers can detect diseases like cancer up to 15 months before they become visible through traditional imaging diagnostics, dramatically improving survival rates and reducing costs. This shift to early diagnosis is transforming cancer care: early diagnosis of colorectal cancer through liquid biopsy has improved 5-year survival rates from 14% to over 90%.
We suggest looking beyond traditional operators, as the companies driving the transformation of healthcare are often absent from conventional investment benchmarks in the sector. A long-term perspective is essential, as the genomic revolution represents a fundamental change in medicine that will unfold over decades, rewarding patient capital with potentially extraordinary returns.
Investments in the healthcare sector today are not just about funding an industry, but accelerating humanity's transition from a reactive disease treatment model to a proactive and personalized health management future, with profound implications for both human well-being and economic prosperity.
