Yahoo Finance Why Asian Healthcare is an Attractive Sector to Invest in
As the saying goes, health is wealth.
The pandemic has emphasized the importance of healthcare and hygiene in our daily lives.
Proper hand sanitation, vaccinations, mask-wearing and social distancing are activities that all of us had to contend with.
Companies such as Abbott Labs (NYSE: ABT) developed antigen rapid test (ART) kits that people could use to quickly determine if they were infected.
And integrated healthcare player Raffles Medical Group (SGX: BSL) assisted the Singapore government with vaccinations and set up transitional care facilities to ease the load off public hospitals.
Even as the world transitions to the endemic phase and people start living with the COVID-19 virus, the need for healthcare remains acute.
Hence, investors who are considering an appropriate sector to park their money in should look at the healthcare industry.
Not only are businesses within it more resilient as there is consistent demand for their services, but the sector also enjoys long-term catalysts that can help grow the companies’ top and bottom lines.
We offer several reasons why Asian healthcare is an attractive sector to invest in.
An ageing Asia
Asia has two of the world’s most populous nations – China and India.
And this population is rapidly getting older, creating a need for expanded healthcare solutions to come with this silver tsunami.
By 2050, one in four people in Asia will be more than 60 years old.
Also, people aged 60 and above will triple between 2010 and 2050 and reach close to a staggering 1.3 billion people.
This demographic shift will have social and economic implications on how communities are built as well as the organisation and delivery of appropriate healthcare and social services.
For a start, more nursing homes will need to be constructed and operated as older people require more help with care and mobility.
Healthcare REITs such as Parkway Life REIT (SGX: C2PU) and First REIT (SGX: AW9U) will benefit as they own nursing homes in Japan and Singapore.
Econ Healthcare (SGX: EHG), which owns nursing homes in Singapore, Malaysia and China, should also see increased demand.
With a larger proportion of people getting older and needing more frequent check-ups, health screening and medical tests, players such as IHH Healthcare (SGX: Q0F) and Thomson Medical Group (SGX: A50) should also see steadily-increasing patient loads.
A healthier Singapore
Singapore also unveiled its new “Healthier SG” initiative last year to focus on preventative care.
The idea is to get people to take charge of their healthcare needs by enrolling with a single doctor who will support them throughout their lives.
As of 30 May this year, 24,000 people had pre-enrolled for Healthier SG with their regular general practitioners (GPs).
Since registration started on 7 July, 67,000 people have signed up for the initiative.
Next year, the prices of medication at GP clinics will be lowered to be closer to those of polyclinics to encourage people to stick with their family doctor.
The government’s push has gained good traction and should see better momentum as this scheme is rolled out this month.
This year’s Singapore Budget has seen S$16.88 billion allocated to healthcare spending, the second-highest among seven ministries.
The Ministry of Finance has also projected that healthcare spending will exceed 20% of gross domestic product by 2030 due to rising healthcare costs.
These statistics should ensure sustainable tailwinds for businesses in the healthcare sector.
Keeping fit and trim
With a rapidly-ageing society, Singapore is now transitioning from reactive to preventive measures.
The government could come up with measures to encourage the private sector to build more facilities to help augment publicly-available healthcare centres and hospitals.
The saying – prevention is better than cure also rings true.
By exercising and maintaining a healthy diet, seniors are less likely to suffer from chronic conditions such as hypertension, diabetes, and high cholesterol.
Nike (NYSE: NKE) is a sports footwear giant that sells apparel and sneakers while Lululemon (NASDAQ: LULU) sells specialised apparel for yoga practitioners.
Both retailers should see higher demand for their products as people pursue healthier lifestyles through regular exercise.
Get Smart: A multitude of opportunities
It is clear from the evidence above that healthcare enjoys multiple tailwinds.
Businesses that cater to preventative healthcare, along with integrated healthcare players and those producing medical consumables and equipment, stand to benefit from increased demand as Asia’s population ages.
As an investor, there are a multitude of opportunities for you to explore in the Asian healthcare sector.
You can start with the names mentioned in this article and also look out for other names as you go along.
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Disclosure: Royston Yang owns shares of Nike and Raffles Medical Group.
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