chinazh
SI Opener: Investing in health and disease prevention is the best cure

SI Opener: Investing in health and disease prevention is the best cure

06-04-2021 | SI Opener
Covid-19 has put the spotlight on health. But our investment and Active Ownership teams have had a focus on health, health care and healthy food for some years already. We take the good aspects of it, such as the excellent investment opportunities that can be found in disease prevention, pharmaceuticals, fitness, and healthy and plant-based food, with the bad things. For this we are engaging with companies to create new health models that can drive down costs, produce food with less fat, sugar and salt, and fewer antibiotics in the meat supply chain.
  • Masja Zandbergen - Albers
    Masja
    Zandbergen - Albers
    Head of sustainability integration

Speed read

  • Consumer shift towards healthy and sustainably produced food
  • Healthy living and disease prevention is a big investment theme
  • Innovation and digitalization is changing health care management
Climate investing: from urgency to solutions
Climate investing: from urgency to solutions
Read more

The future of food is healthy and sustainable

In the last 50 years, global food production and dietary patterns have changed substantially. Increasing crop yields and improving production have helped improve life expectancy and reduce hunger. However, these benefits are being offset by massive environmental degradation due to unsustainable farming practices, along with health problems ranging from obesity to heart disease, as diets become higher calorie and heavily processed.

According to the World Health Organization, overweight and obesity levels have tripled since 1975, with 39% of adults now overweight and 13% obese. At the same time, 9.2% of adults are underweight. The coexistence of people being overweight and underweight has created a double burden of malnutrition in our world. So, it is safe to say that malnutrition is an issue.

Due to these issues, we are seeing shifts in consumer preferences towards healthier and sustainably produced food1. We find the most attractive investment opportunities in plant-based food and beverages, in meal kits such as those from HelloFresh and Marley Spoon, and in restaurant software. Pure-play food companies in these segments are becoming more relevant to consumers, they operate in a very large market, and have relatively low product penetration. This provides them with excellent growth opportunities. Cultured meat looks promising from an environmental perspective and its production costs are decreasing. Its commercial viability, however, is still unclear.

Challenges remain for food giants because they still derive most of their sales from relatively unhealthy food. They are improving though. We find smaller packaged food companies with a better health and sustainability profile better positioned for now.

How to invest in healthy living

Besides these food trends, Robeco has an investment strategy that is dedicated to investing in companies that support healthy living2. We distinguish between four areas of interest: three are about prevention and one is focused on treatment:

  1. Consumer awareness of healthy nutrition: this very much ties into the future of food and is about investing in ingredients, organic and natural food, but also the companies that provide solutions for food safety and analysis. There is much room for growth as the current market share for organic food in the US, for example, is only 5%. It is, however, growing steadily.
  2. Public awareness of healthy lifestyles: obesity levels are already high, but unfortunately almost one-third of the world has put on weight during the pandemic (including yours truly unfortunately), and the average weight gain has been 6.1 kg!3 So the strategy’s stocks that are related to fitness and activity are doing well. They are mostly in athletic apparel, but also fitness equipment.
  3. Hygiene and consumer health products: another area that is not new to our healthy living strategy, but has become very topical during the pandemic, are hygiene products. Think about oral, hair and skin products, and vitamins and nutritional supplements.
  4. And last but not least, it is not only prevention that is an interesting area, but also the incidence of lifestyle diseases led by ’diabesity’, heart disease, strokes and cancer. We invest in prevention and diagnosis, health care efficiency and chronic care.

The health trend is truly a long-term one. The risk as measured by volatility is relatively low, and the strategy has outperformed the market since its launch in 2007.

Taking the good with the bad

Even though we see this trend towards prevention and healthy living as interesting, the amount of money that is spent on prevention is still only a fraction of the costs of cure. These costs are still rising everywhere and are now almost 17% of GDP in the US!

In the last SI Opener, we explained the role of the meat supply chain4 in threatening global health, and the engagement we are doing with some of the companies in which we invest that are active in the meat supply chain. Here we would like to focus on two other engagement themes that we do in this area.

The first is our engagement on the risks of sugar in food . This three-year engagement closed in 2019, but turned out to be very relevant, as research by the UK’s National Health Service shows that one-third of the people who died from Covid-19 had either Type 1 or Type 2 diabetes, a condition that is often linked to obesity and sugar.

Aside from the health issues, the negative impact on the performance of a company using sugar in its processes can be significant. The costs associated with obesity include increased health care expenses, decreased productivity and premature deaths. Because of this, food and beverage companies face regulatory, reputational, legal and market risks.

Examples of this are governments in both high and lower-income countries that are introducing a sugar tax, or are restricting advertising of less-healthy products to children. Regulation is increasing over the use of health and nutrition claims, while food labelling requirements are being strengthened. Ultimately, companies that do not adjust to changing dietary preferences may lose market share, revenues and profits.

Disrupting the health industry with tele-tools

The second engagement theme concerns digitalization and innovation, which we believe can reduce health care costs. However, a shift in mindset is needed. Will the health care industry be disrupted? Three developments suggest that change is on its way.

Firstly, while health care has traditionally been an industry slow to adopt new technology, it now appears to be embracing digital innovation at a growing rate. Increasingly, there is electronic harmonization of patient data exchange between doctors, health service providers and pharma companies.

Secondly, more companies are open to data exchange between firms to maximize the potential of the insights this can bring. Thirdly, the introduction of telemedicine could reduce the cost and waiting time for patients to receive a consultation from a qualified medical expert.

In addition, pharmaceutical research is increasingly using new technologies such as AI to help reduce the time and costs related to drug development. Recent reforms also indicate a shift from activity-based to outcome-based models, and digitalization can surely further enhance this trend. There are numerous opportunities, from promoting healthy behavior and drug personalization, to remote monitoring, holistic analysis and improved decision making. Digitalization cannot single-handedly solve health care challenges, but it can help in controlling costs, improving quality, and guiding the sector towards more patient-centric care.

Main aim of engagement

The main aim of our engagement is to gain perspective into the current state of the health care industry related to digitalization, and to motivate companies to utilize opportunities as well as to be aware of, and mitigate, their related risks. Within our engagement we will consider the following objectives:

  1. Digital strategy: does the company have a sound digital strategy that is integrated throughout the organization?
  2. Sector collaboration: is the company working together with stakeholders to optimize benefits and mitigate risks coming from digitalization?
  3. Innovation management: how does the company use digitalization to both optimize its processes and in new product development?
  4. Sales and marketing strategy: how does the company use digital technology to improve the quality of its sales and marketing processes?
  5. Cybersecurity: is the company aware of cybersecurity risks and is it doing everything in its power to mitigate those risks?

As with all material ESG issues, we believe that engaging with health care companies will push the sector forward, and will also help us to select for investment portfolios those companies that have a healthy future.

1Robeco white paper: Trends investing, the Future of Food, 24 March 2021, Sam Brasser
2Watch our newest video here: https://www.robeco.com/en/insights/2021/02/we-believe-that-the-trend-around-healthy-living-is-long-lived-.html
3https://www.ipsos.com/en/covid-diet-and-health#:~:text=A%20third%20of%20the%20population,on%20an%20additional%206.1kg.
4https://www.robeco.com/en/insights/2021/02/si-opener-the-meat-supply-chain-is-a-major-threat-to-global-health.html
5https://www.robeco.com/en/insights/2020/07/sugars-role-in-coronavirus-fatalities.html
6Digital innovation in healthcare research report, Robeco Active Ownership team, December 2019

SI Opener
SI Opener
Seeing is believing.
Read all articles

免责声明:

本文由荷宝海外投资基金管理(上海)有限公司(“荷宝上海”)编制, 本文内容仅供参考, 并不构成荷宝上海对任何人的购买或出售任何产品的建议、专业意见、要约、招揽或邀请。本文不应被视为对购买或出售任何投资产品的推荐或采用任何投资策略的建议。本文中的任何内容不得被视为有关法律、税务或投资方面的咨询, 也不表示任何投资或策略适合您的个人情况, 或以其他方式构成对您个人的推荐。 本文中所包含的信息和/或分析系根据荷宝上海所认为的可信渠道而获得的信息准备而成。荷宝上海不就其准确性、正确性、实用性或完整性作出任何陈述, 也不对因使用本文中的信息和/或分析而造成的损失承担任何责任。荷宝上海或其他任何关联机构及其董事、高级管理人员、员工均不对任何人因其依据本文所含信息而造成的任何直接或间接的损失或损害或任何其他后果承担责任或义务。 本文包含一些有关于未来业务、目标、管理纪律或其他方面的前瞻性陈述与预测, 这些陈述含有假设、风险和不确定性, 且是建立在截止到本文编写之日已有的信息之上。基于此, 我们不能保证这些前瞻性情况都会发生, 实际情况可能会与本文中的陈述具有一定的差别。我们不能保证本文中的统计信息在任何特定条件下都是准确、适当和完整的, 亦不能保证这些统计信息以及据以得出这些信息的假设能够反映荷宝上海可能遇到的市场条件或未来表现。本文中的信息是基于当前的市场情况, 这很有可能因随后的市场事件或其他原因而发生变化, 本文内容可能因此未反映最新情况,荷宝上海不负责更新本文, 或对本文中不准确或遗漏之信息进行纠正。
Logo

Disclaimer

The information contained in the website is solely intended for professional investors. Some funds shown on this website fall outside the scope of the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and therefore do not (need to) have a license from the Authority for the Financial Markets (AFM).

The funds shown on this website may not be available in your country. Please select your country website (top right corner) to view the products that are available in your country.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

Please confirm that you are a professional investor and/or institutional investor and that you have read, understood and accept the terms of use for this website.

I Disagree