Welcome to another episode of Across the Pond, where we discuss the big stories and top investment ideas from the Eurozone and Switzerland. Advances in healthcare and living standards mean people are living longer than ever. At the same time, we're seeing a big demographic shift. In 2024, 830 million people were aged 65 and over. That's 10% of the global population. By 2050, that number is expected to reach 1.6 billion. North America and Europe are leading the way, with nearly one in five residents already in this age group. This combination of longer life spans and an aging population is reshaping economies, markets, and the way companies operate. That's why, at the Chief Investment Office, we believe longevity will be one of the key forces driving equity markets in the coming decade. In fact, we estimate the longevity theme could unlock an $8 trillion US dollar market by 2030, with the healthcare sector already leading the way as it adapts to an aging population. In this episode, we explore why longevity matters for society, the economy, and investors, highlighting the sector's poised to benefit and the emerging opportunities. I'm Belinda Peters from the Chief Investment Office, joined today by our special guest professor Nick Pomerini, director of the UK National Innovation Centre on Aging, and Diana Na, CIO's top healthcare equity analyst, to share insights on the investment implications for Europe. Thank you both so much for joining me. All right, let's start with the big picture. Most countries around the world are seeing their elderly populations grow, and in North America and Europe, nearly one in five people is already aged 65 or older. Nick, just how significant is this shift? And what do you think this really means for society, the economy, and perhaps financial markets? So good to be here, Belinda, thanks for inviting me. The shift is a giga shift, as we used to say. We have two giga trends happening at the planet, climate change and aging. So climate change has been quite well addressed from many perspectives. But aging still remains probably one of the biggest challenges, but also opportunities that we have as a society. We are shifting from what we have defined in an aging society to a longevity society. So it's not only a matter of getting old, but also the fact that there is a demographic factor that we're not making children anymore. Combining these two factors and the fact that somehow we're living for longer are literally redesigning the society the way we have envisioned so far. And it's something that it's touching literally all the dimension. It's touching a very individual dimension, but it's mainly also a societal dimension. it's a behavioral dimension it's a political dimension sometimes gets to be forgotten somehow we treat longevity as it's something happening to us and we observe it but we don't do anything to change the way we approach it while this is something that literally is touching all the dimensions of life that goes from the very individual to the very broad and from an individual perspective the research we've done with Fidelity is suggesting for example how many challenges we have ahead of us if we don't think over about the opportunity to live the longer life that we have had, the fact that we're not prepared for that longer life from a financial perspective, but also from a physical, mental, societal perspective, allow us to think that literally we have the probably much needed opportunity to redesign society today, given all the factors happening around us, and envision it from the perspective of the demographic change. I guess we're sitting on a fantastic opportunity we should not miss. So it does sound like companies are facing both challenges and opportunities. Do you think companies are prepared for a world where people could live longer? I think it's part of this logical shift that we should have to take together. I guess we're still thinking, for example, in framing population through generations as being framed in the 90s. And we always follow that schema so that a generation is against the other or the same generation should share the same knowledge and understanding. but maybe it was true in an era in which we couldn't share information as fast as we're doing today. Meaning that what I'm trying to explain and seeing from the research that we do is how much interconnections, for example, are between the generations. But the marketing department, let me say, starting from them, and the research department of the organization are still relying on a model that somehow has been disrupted, even dismantled, by what is happening to all of us today, which I think it's probably the biggest opportunity that companies should face is try to investigate a little bit more about a concept of serving older people because, yes, they have accumulated a little more, let me say, capital so that they could spend more. There is much more than that because this story is not only for older adults. It through the life course of people So that the opportunity It far broader and somehow hidden that requires the innovation that this shift that is happening would deserve that I think might give a lot of return on the investment that companies would like to do on that side And Diana, what do you think from maybe an investor's perspective, how companies are tapping into the longevity opportunity? Do you see any innovations as they adapt to meet the needs of an aging population? Great. Thanks, Belinda. So I'd probably think about the longevity opportunity in two layers. On one side, you know, you've got companies focused on extending not just lifespan, but healthspan. So the number of years, you know, people stay healthy. And that's where most health care companies sit, which we view to be the immediate and direct opportunities. But then, you know, there's a much broader opportunity beyond health care because, you know, people are staying active for longer and consuming differently. So within healthcare, you know, one of the biggest shifts is that aging is no longer seen as something that just happens right at the end of life. It's increasingly managed as a long-term proactive process. So you're seeing a move upstream towards prevention, earlier diagnosis and intervention. And that's critical, you know, both for improving patient outcomes and for reducing pressure on the healthcare systems over time. And a great example of that are the GLP-1 therapies. You know, they're often framed as weight loss drugs. But the bigger picture is that they can reduce downstream complications like cardiovascular diseases, things like heart attacks and strokes, you know, which are still leading causes of mortality today. So by intervening earlier, you're essentially preventing more serious issues later on. And you see a similar trend in other areas like oncology as well, where there's now much more focus on early detection and treating disease before it progresses and becomes harder to manage. Equally, companies are also adapting to better serve an older population. In medical devices, for instance, there's a big push towards more decentralized care, things like remote monitoring or wearables, which allow people to stay independent for longer rather than relying on hospital based care. Then, you know, beyond health care, the opportunity really opens up. So, you know, consumer companies are designing products for older, but still very active individuals. Then you have financial firms that are focusing more on retirement income and longevity solutions to help people prepare financially. And even in real estate, you're seeing a growing demand for age friendly housing. So overall, the companies that are best positioned to capitalize on the longevity opportunity are the ones taking a more holistic approach, thinking not just about extending life, but improving quality of life over a much longer period. And Nick, you've also spoken in your research about adding intelligence to aging. Maybe you could briefly explain what this concept means and how it has tangibly improved a product or a business strategy in practice. Yes. What you think is missing, and we observe it missing in the longevity economy as we define it, it's, let me say, a set of principles, methodologies, tools, data that you have basically for each one of the other industries, but not yet well framed for longevity. That's what we did. It's a lack of intelligence so we can provide organization, public and private, with the knowledge and understanding of what the things that matter to people, for example, and what are the things that could matter to this company. So we have framed in 2019 this concept as aging intelligence, and we've been developing innovation on that science since then, developing the tools, the data, the framework that somehow the industry was and somehow is still missing. So there is a lot of space there to develop innovation to better serve the organization that will serve us as individuals. In the process of aging intelligence, we always engage the people in the debates. So one of the core assets that we have is engaging a community of older adults to discuss with us what could be the need and the desires of their future lives. And it's been translated in practical application to many industries. I can quote, for example, developing walking robots with Piaggio Fast Forward, helping organizations like S.L.O.R. Luxottica to better serve the redesign of the framing so that they can also help people not only that has issues with sightseeing, but also with the hearing loss. helping companies in the financial space, in the entertainment space, in the transportation space, working with cities, working with also national organizations. There is a need of innovation in every field, which I recommend each one listening to us today to try to explore and see longevity as a broad interconnected let me say mapping of what could be the life elements that could help us living healthier longer lives and not simply only from a healthcare perspective So Diana, it seems that, you know, technology and AI are becoming increasingly central to longevity, I would say. So where do you see digital health and AI making the biggest impact? And do you see any investment implications? Yes, I mean, it's a great question because, you know, AI is becoming increasingly central to the longevity theme. If we start with healthcare, you know, where the impact is more immediate. So AI is already being applied across the entire value chain. So most companies are either building internal capabilities or partnering with tech firms, you know, to access them. So in the case of pharma, the main use case today is in drug discovery and clinical development. So AI is essentially helping with things like target identification and trial design, which should reduce both time and cost. Now, we haven't quite seen a full step change in pharma R&D productivity yet, but we are seeing a gradual expansion in the number of drug targets at the preclinical stage, which is a positive signal for the industry. Where the impact feels more tangible is in the diagnostics and the imaging side. So AI can analyze large data sets quickly and in some cases more accurately than humans. So you get earlier detection. And that's key because, you know, in longevity, you know, earlier intervention drives better outcomes. Now, looking ahead, I think the biggest opportunity is really around personalized healthcare. We're moving away from this one-size-fits-all approach towards something much more individual. So using AI to combine genomics and medical records to predict risk earlier. So basically, shifting from treatment to managing health over time, which is at the core of longevity. Now, from an investment perspective, you know, this really widens the lens. It's not just about pharma or diagnostics. It's companies that can combine data, technology and clinical applications. But overall, I still think we're in the early stages of realising the full potential. But over time, AI has the ability to make healthcare much more predictive in the line with longevity, you know, which creates a compelling opportunity set. And Nick, you've said that longevity is about life, not just biology. I'm also curious to know if that means that the biggest business opportunities are actually outside of traditional health care. It is indeed. I guess we are missing a business model for prevention, which probably lies at the background of what we're saying. We have a wonderful, well-working business model for health care, for care. It's a, let me say, sick care model, which is working so well. and thanks God we have it, but we're not seeing the other side of the coin. We know that 80% of non-communicable diseases could be prevented. Hence, there is a huge space on how we can design better strategies for our life in somehow helping us changing behaviours, changing our lifestyles, be part of a far more, let me say, personalised and interactive way on how we can design our future strategy for health, meaning that it's an opportunity that touches every industry. And that's where we think the real opportunity of a difference between the silver economy and longevity economy lies. A silver economy is an economy which is waiting us to get old somehow and just try to fix what could be the needs happening later in life. A longevity economy is an economy that help us, that guide us, that suggest us how we can overall the life course, take advantage of the things that can improve our health journey to win, let me say, the fantastic gift of a healthier, longer life. Diana, do you agree perhaps that investors are focused too much on healthcare and if there are any other overlooked areas that could potentially drive growth? Yes, I mean, look, I still think healthcare is still central to the longevity theme. As people age, the risk of chronic diseases increases. So it's a big part of the story, but not the whole story. In fact, some of the most interesting momentum we're seeing is on the consumer side. If the goal is to live longer and healthier, you know, the focus naturally shifts towards prevention and that comes down to things like nutrition, exercise and mental well-being. So you're seeing a lot of innovation in areas like food, supplements and even beauty where products are more positioned around healthy aging. And one theme that really gaining traction is this idea of food as medicine There a growing awareness that what you eat plays a big role in long health especially for cardiometabolic conditions So demand is rising for more functional science-backed products, whether that's for gut health, blood sugar control, or overall well-being, and that's becoming more mainstream. So from an investment angle, these areas tend to be more scalable, and they're generally less regulated than traditional farmer. Plus, they're also supported by a strong consumer base. So older consumers tend to hold a larger share of wealth and are increasingly willing to spend on staying healthy and having a higher quality of life. So if anything, I'd say investors might be underestimating this side of the story. Of course, healthcare is still essential, but a growing share of the opportunity is likely to come from consumer innovation going forward. And so far, we've talked about how important it is to reframe longevity. And in this podcast, we always try to bring it back to Europe. So more concretely, where do you see the most interesting longevity-driven opportunities right now, Diana? Yes, no, thanks a lot. I mean, I think Europe is often underestimated when it comes to longevity opportunities. Where it really stands out is in the healthcare innovation, especially in places like the UK and Switzerland. There's a strong link between academic research and commercialization and a pretty solid track record of turning early stage science into real products, whether that's drugs, medical devices or diagnostics. So from an investment lens, you know, that innovation engine still feels somewhat underappreciated. Unfortunately, the healthcare sector did come under pressure last year, largely due to US policy concerns. But with some of the drug pricing agreements now in place, you know, that overhang is easing. Within healthcare, oncology remains a key area of growth opportunity. A significant share of clinical trials are still focused there. And we're seeing a shift towards more targeted precision therapies, which is resulting in differentiated treatments. Another area I'd highlight is cardiometabolic health, especially since the focus shifts more towards prevention. we're seeing continued innovation you know from next generation GLP-1 therapies to broader approaches targeting cardiovascular risk and that has the potential to expand the market quite meaningfully over time. But as discussed before you know it's not only about healthcare you know Europe's aging population is also driving demand across areas like food and nutrition, the leisure market and real estate, you know, segments that tend to get less attention, but are directly supported by demographic tailwinds. So all in, you know, I'd say Europe is not only an innovation hub, but also a very clear example of how longevity translates into investable opportunities. Okay, thank you, Diana. And also thanks, Nick, for joining us today. We unfortunately don't have time for any more questions. But I also want to thank our listeners. We can delve into specific securities on these podcasts, but you can explore some of these with your UBS representative. But just to quickly sum up, investors should look at both the drivers and beneficiaries of longevity, not just companies catering directly to an aging population. In Europe, healthcare remains a core focus, especially areas like obesity, cancer and medical devices, which are already adapting to demographic change. Additionally, consumer companies targeting healthy aging, the leisure market and real estate developments in senior living could capitalize on the growing needs of seniors. We'll be back soon with another installment of Across the Pond. And in the meantime, have a great week. Providing wealth management services to clients globally, UBS AG and its subsidiaries offer both investment advisory services and brokerage services. Investment advisory services and brokerage services are separate and distinct, differ in material ways, and are governed by different laws and separate arrangements. In the USA, UBS Financial Services, Inc. is a subsidiary of UBS AG and a member of FINRA SIPC. For information, please visit our website at ubs.com forward slash working with us. For a full legal disclaimer applicable to the independent investment views produced by UBS, please visit our website at ubs.com forward slash CIO dash disclaimer.
