September 11, 2024 • 4 mins
As birth-rates decline and the population gets older, investors are grappling with a new set of challenges.
Recent data indicates the proportion of Kiwis over the age of 65 will be expected to double by 2050.
Milford Asset Management's Deborah Lambie says this demographic shift is expected to have an impact on the healthcare system - and lead to a worker shortage.
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Episode Transcript
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Speaker 1 (00:00):
Deborah Lambeas of Milford Asset Management. Hey, Deborah, Hi, how
are you very well? Thank you. Listen. One thing that
we're talking a lot about in the community at the
moment is aging populations. Do you get the impression investors
in thinking about this as well?
Speaker 2 (00:13):
Yeah. So, the rise of aging populations around the world
is one of the most significant demographic shifts in modern history.
So here in New Zealand, the proportion of people aged
over sixty five is expected to almost double by twenty fifty,
and globally we see similar trends. So the number of
people aged over sixty is expeded to double and the
number of people aged over eighty is expeded to triple
(00:34):
by twenty fifty. And investors are increasingly focused on the
implications of this, given that on average, twenty five percent
of total healthcare spend occurs in the last ten years
of life of an individual and around ten percent in
the final year of life. So aging populations simultaneously placed
immense pressure on healthcare systems and create substantial opportunities for
(00:56):
companies that provide critical services. Due to increasing demands medicine,
hospital care, and death care services are.
Speaker 1 (01:03):
There many businesses many companies who are actually talking about
how this aging population trend will impact them.
Speaker 2 (01:09):
Yeah, and I'll maybe give you three three examples. So
HCA operates over one hundred and eighty hospitals in the
US and it's expecting total spend in hospitals to accelerate
to around six percent per year over the next decade.
So in other words, that means that it will have
almost doubled its revenue in ten years time. Another example
is AstraZeneca, which is a global pharmaceutical company, and it
(01:30):
expects global demands of pharmaceuticals to accelerate from around four
percent growth per year to around six percent. And a
final interesting example is Service Corp, which is a death
care provider in the US and they operate in the funeral,
cremation and cemetery space. And so when I met with
the company earlier in the year in the US, they
were talking about expecting an increase in volumes for a
(01:50):
decade and a half and that's driven by the first
baby boomers reaching eighty years old starting from twenty twenty six.
So this is a bit of a morbid topic. But
as they say, nothing is third in this life apart
from death and taxes.
Speaker 1 (02:02):
That's true, I suppose when it comes to how they're
performing on the market. How are these companies who are
in healthcare and death care fearing when you compare them
to a let's say, the high growth sectors like AI.
Speaker 2 (02:11):
Yeah, so when companies like Nvidia Day have absolutely soar
due to the AI boom, the more steady returns from
healthcare and death ke sectors are still actually highly respectable,
especially in this more defensive part of the market. So
Astrosenic and Service Corps shares have delivered a respectable low
double digit percentage return on average over the past five years,
and HHA has been even more impressive, delivering an average
(02:34):
twenty five percent return per year over the past five years.
Speaker 1 (02:37):
And then what about the workers in healthcare? How are
the how's the agent population going to affect them?
Speaker 2 (02:42):
Yeah? So, in addition to increasing demand for healthcare, aging
populations of course reduced the pool of working age people.
So this means we have less work to do the
work that we're currently doing, and we're going to have
more of that work. So companies are looking for solutions
and things like automation and robotics, and this is leading
to advances and things like automated pharmacies, and these work
via robots that can scan a QR copra of prescription,
(03:05):
get the medicines that have been prescribed to spense them,
and then while you can pick up your prescription, no
humans required. And a company called Becton Dickinson is the
global leader here. And then we're also seeing very rapid
advances and things like laboratory automation, which is greatly increasing
the efficiency of the way that lads run.
Speaker 1 (03:22):
Yeah, is this happening in other sectors as well.
Speaker 2 (03:24):
Yes, So as the pool of working age people shrinks,
sectors ranging all the way from manufacturing through to logistics
are increasingly turning to automation to fill the gap and
maintain productivity. So, for example, robotic density and manufacturing has
doubled over the past six years and has increased set
to increase further. And so robots greatly increase the productivity
(03:45):
of factories. They keep workers and safer by literally taking
the load of heavy lifting, and they also reduce the
number of people required in the factory. So these are
just a few examples of ways that companies are innovating
to help with solutions that develop nations require as they
face shrinking workforces and aging populations.
Speaker 1 (04:02):
Debra, Listen, that's fascinating. Thank you so much. I really
appreciated the Zebra Lambie Milford Asset Management. For more from
Hither Duplessy Allen Drive, listen live to News Talk ZIB
from four pm weekdays, or follow the podcast on iHeartRadio
Deborah Lambeas of Milford Asset Management. Hey, Deborah, Hi, how
are you very well? Thank you. Listen. One thing that
we're talking a lot about in the community at the
moment is aging populations. Do you get the impression investors
in thinking about this as well?
Speaker 2 (00:13):
Yeah. So, the rise of aging populations around the world
is one of the most significant demographic shifts in modern history.
So here in New Zealand, the proportion of people aged
over sixty five is expected to almost double by twenty fifty,
and globally we see similar trends. So the number of
people aged over sixty is expeded to double and the
number of people aged over eighty is expeded to triple
(00:34):
by twenty fifty. And investors are increasingly focused on the
implications of this, given that on average, twenty five percent
of total healthcare spend occurs in the last ten years
of life of an individual and around ten percent in
the final year of life. So aging populations simultaneously placed
immense pressure on healthcare systems and create substantial opportunities for
(00:56):
companies that provide critical services. Due to increasing demands medicine,
hospital care, and death care services are.
Speaker 1 (01:03):
There many businesses many companies who are actually talking about
how this aging population trend will impact them.
Speaker 2 (01:09):
Yeah, and I'll maybe give you three three examples. So
HCA operates over one hundred and eighty hospitals in the
US and it's expecting total spend in hospitals to accelerate
to around six percent per year over the next decade.
So in other words, that means that it will have
almost doubled its revenue in ten years time. Another example
is AstraZeneca, which is a global pharmaceutical company, and it
(01:30):
expects global demands of pharmaceuticals to accelerate from around four
percent growth per year to around six percent. And a
final interesting example is Service Corp, which is a death
care provider in the US and they operate in the funeral,
cremation and cemetery space. And so when I met with
the company earlier in the year in the US, they
were talking about expecting an increase in volumes for a
(01:50):
decade and a half and that's driven by the first
baby boomers reaching eighty years old starting from twenty twenty six.
So this is a bit of a morbid topic. But
as they say, nothing is third in this life apart
from death and taxes.
Speaker 1 (02:02):
That's true, I suppose when it comes to how they're
performing on the market. How are these companies who are
in healthcare and death care fearing when you compare them
to a let's say, the high growth sectors like AI.
Speaker 2 (02:11):
Yeah, so when companies like Nvidia Day have absolutely soar
due to the AI boom, the more steady returns from
healthcare and death ke sectors are still actually highly respectable,
especially in this more defensive part of the market. So
Astrosenic and Service Corps shares have delivered a respectable low
double digit percentage return on average over the past five years,
and HHA has been even more impressive, delivering an average
(02:34):
twenty five percent return per year over the past five years.
Speaker 1 (02:37):
And then what about the workers in healthcare? How are
the how's the agent population going to affect them?
Speaker 2 (02:42):
Yeah? So, in addition to increasing demand for healthcare, aging
populations of course reduced the pool of working age people.
So this means we have less work to do the
work that we're currently doing, and we're going to have
more of that work. So companies are looking for solutions
and things like automation and robotics, and this is leading
to advances and things like automated pharmacies, and these work
via robots that can scan a QR copra of prescription,
(03:05):
get the medicines that have been prescribed to spense them,
and then while you can pick up your prescription, no
humans required. And a company called Becton Dickinson is the
global leader here. And then we're also seeing very rapid
advances and things like laboratory automation, which is greatly increasing
the efficiency of the way that lads run.
Speaker 1 (03:22):
Yeah, is this happening in other sectors as well.
Speaker 2 (03:24):
Yes, So as the pool of working age people shrinks,
sectors ranging all the way from manufacturing through to logistics
are increasingly turning to automation to fill the gap and
maintain productivity. So, for example, robotic density and manufacturing has
doubled over the past six years and has increased set
to increase further. And so robots greatly increase the productivity
(03:45):
of factories. They keep workers and safer by literally taking
the load of heavy lifting, and they also reduce the
number of people required in the factory. So these are
just a few examples of ways that companies are innovating
to help with solutions that develop nations require as they
face shrinking workforces and aging populations.
Speaker 1 (04:02):
Debra, Listen, that's fascinating. Thank you so much. I really
appreciated the Zebra Lambie Milford Asset Management. For more from
Hither Duplessy Allen Drive, listen live to News Talk ZIB
from four pm weekdays, or follow the podcast on iHeartRadio
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