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Investing in a healthier society

Ben Constable-Maxwell, Head of Sustainable and Impact Investing at M&G Investments, extends his commentary on the importance of investing in companies which deliberatively set out to deliver a positive impact as part of their mission. In this article he looks at how companies can target sustainable returns from addressing the world’s healthcare challenges.

That many of us today can expect to live longer and healthier lives is largely thanks to medical advances. Some of these innovations have been the product of revolutionary science, while other improvements have been incremental.

All of these advances, however, are the product of investment. It often costs companies millions of pounds to develop laboratory research and to manufacture new devices. It also tends to take years to undertake trials and receive approvals – with no guarantees of success, of course.

Where companies can successfully combat the world’s major health challenges, I believe long-term investors can be rewarded for their patience, with lasting benefits for society.

Living longer, living better

The importance of addressing these challenges is reflected in the UN Sustainable Development Goals, which articulate the world’s most pressing sustainability issues. Specifically, Goal 3 is to ensure healthy lives and promote well-being for all at all ages.

The importance societies attach to good health is reflected in the amount spent on it. It is typical for better-off countries to spend roughly one-tenth of national income, as measured by gross domestic product (GDP), on healthcare goods and services.

Moreover, the trend is upward. The share of the UK’s GDP spent on healthcare rose from 7.4% to 9.6% between 2007 and 2017, according to the OECD. In the United States, the world’s largest healthcare market, it rose from 14.9% to 17.2% of GDP during this period.

With societies ageing, putting upward pressure on healthcare costs, companies that can deliver healthcare goods and services at better quality, or better value, should not only enjoy commercial success, but also help extend good health to more people around the world.

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