We are now more than 6 months into the COVID19 pandemic, which still seems to occupy the exclusive attention of many policy makers and businesses. Economic uncertainty remains high. globally, the number of people aged 60 year and more will grow by 42% between 2018 and 2030 compared to only 8% for the population under 60. While some businesses are trying simply to stay afloat - and that is hard enough - many are also reviewing and developing new strategies, products, processes and services portfolios to adapt to the new circumstances. I would suggest that the implications for investment in the phenomenon of population ageing may be profound.
In recent years, global levels of investment in health products and services for ageing populations have grown in tandem with research interest within biomedicine and medical engineering. Research spending has started to reflect the growing awareness of the phenomenon and its importance. The numbers that tell us about the increase in the relative and absolute size of the older populations may be well-known but they bear repeating: by 2025, in developed countries. there will be more people aged 65 years and over than below 20; globally, the number of people aged 60 year and more will grow by 42% between 2018 and 2030 compared to only 8% for the population under 60. These changes point to big changes in political influence. Much of the funds for ageing research in universities, including pre-commercial medical research on a wide range of age-related diseases, as well as investment in new urban planning (housing and mobility) for older citizens, have come from the public purse. The investment momentum remains steady, and we see large groups of policy makers in different settings trying to develop overarching platforms to coordinate effort and enhance the impact.
Research companies have estimated that in the US people below 45 years old control only 11% of investable assets and people above 55 years old spend twice than the millennials. The same age differences in wealth and income have been observed in Japan. We know, of course, that older people spend their money differently from younger people, and most notably they spend more on health care (and this is not just public spending). The private sector has been running fast to catch up with the trends and to make sure that it is able to identify attractive opportunities. New research areas such as precision medicine, chronic disease management, health monitoring (both mental and physical) and early prevention are hot spots for pharmaceutical companies, technology providers and emerging start-ups. Policy makers are providing more incentives and do what they can to accelerate developments. We can already see more flexibility of regulations and a rapid adoption of telemedicine. Some pharmaceutical companies are developing a more explicit and comprehensive strategy to focus on ageing opportunities, including experimentation with technology providers and collaborations with major policy makers such as USA, Japan and China.
It has been frequently observed that the older generation is lagging behind in the adoption of new digital technologies. It seems, however, that the pandemic is changing this situation quite rapidly and that the age gap is closing quickly. The impact of new safety regulations in many nursing homes (no visits from family) and the advice to ‘at risk’ older people to stay at home (and avoid visitors if possible) has put a premium on new technologies as a means of communication for older people who would otherwise be much more isolated than usual. It has become more important than ever to get familiar with digital tools and realise the social potential of new technology applications and the benefits of forming strong virtual communities. Technology companies are making use of more inclusive design to support and smooth the transition for new users. It could even be argued that the focus of many technology companies has gradually shifted from mainly younger generations to the older population. They are a potentially lucrative market.
With the blossoming of innovations, many venture capital companies are establishing investment vehicles targeting ageing opportunities. Corporate venture capital funds, especially in the pharmaceutical sector, are pro-actively approaching start-ups which offer a good chance of being complementary to the parent companies’ strategy towards the ‘ageing market’. Start-ups developing new molecules for drug therapies, digital devices and services and care coordination and networks applications are all being targeted by venture capital funds. Because there is often a longer time frame for their exit strategy, especially in the new medicine research areas, it has become common to apply the royalty sharing model to bridge the funds’ cash flows.
The phenomenon of population ageing has unquestionably increased investment appetite in the private sectors. The roles of policy makers and academic institutions will likely evolve further to support this. Up to now, the public sector has concentrated on developing the basic science, as well as providing direct investment in infrastructure and promoting general awareness of population ageing. Now, there seems to be a shift, with policy makers addressing themselves to problems of regulation and the need for incentives to the private sector while safeguarding vulnerable groups. As for the universities and publicly funded research institutions, they have already contributed massively to a solid understanding of the phenomenon, which means - perhaps - that their focus might shift to establishing sustainable social enterprises and potential platforms for working with the private sector to enhance the impact of new developments.
About the Author:
Luc Yao is a Visiting Fellow at the Oxford Institute of Population Ageing. Luc is based in Darmstadt, Germany and is active in the display industry, related start-ups, and the Open Innovation networks. His research at the Institute focuses on the adjacent domains of population ageing, digital health and developing countries.
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