Healthcare - a growth sector
The global market for healthcare products and services is estimated to be worth over $7.5 trillion and will remain an area of sustained structural demand and growth for many decades to come, for multiple key reasons.
Increasing wealth in middle income and developing countries
Over the past 20 years we have seen a significant reduction in the proportion of the global population living in absolute poverty and a rapid increase in the proportion of the world’s middle class. According to the OECD, the global middle class will expand from 1.8 billion people in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030.
Healthcare systems in transition economies have been experiencing rapid growth. Governments in these countries are establishing and expanding their healthcare systems on the one hand while a growing middle class is increasing its consumption of private healthcare services on the other.
An ageing population in developed markets
There is a longstanding relationship between age and healthcare expenditure. The elderly spend disproportionately more on healthcare compared to younger age groups, with the majority of expenditure per capita from the over 60s.
Greater understanding of the pathogenesis of disease
New technologies helping the identification of gene patterns and protein expression are allowing scientists to define disease states at the molecular level and appreciate the variation in pathology between individuals. This is driving the development of new, more targeted interventions and thus allowing physicians to tailor treatments to individual needs.
Cost containment and healthcare reform
Inevitably, there comes a point where a society feels that the cost of healthcare is too much, which is arguably the case in a number of developed countries. Bellevue does not expect to see significant increases in the proportion of GDP per capita available for healthcare, to increase materially in these developed markets.
Reforming healthcare delivery to improve outcomes and deliver better value for money is a constant theme in developed economies. It is a politicised debate in the United States, which is the largest single market (at US$2.9 trillion per annum) for healthcare products and services. While pricing convergence seems inevitable in the long-term, especially for drugs, this will be a slow trend as there will not be a graduated shift towards a government delivered single provider system in the US, as is common in most European countries. Most of the important rapidly developing markets (e.g. India and China) remain dependent on private providers to deliver services.