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Investing in a Healthier World

As global health issues come to the forefront, these three areas offer investors a chance to make a difference while pursuing growth

THE WORLD HAS A WEIGHT PROBLEM, and it's getting worse. Even though the U.S. had previously been seen as ground zero for the obesity epidemic, the rates are spiking internationally—particularly in low- and middle-income nations. A 2014 study in The Lancet found that more than 2.1 billion people are overweight or obese—nearly 30% of the world's population.

"The worldwide rise in obesity illustrates how health issues once associated with particular climates or particular stages of development have become global concerns," says Sarbjit Nahal, head of Thematic Investing at BofA Merrill Lynch Global Research. Diseases have always ignored borders. But today changing lifestyles, aging populations, advances in technology and increased international travel make it more likely than ever that disease-causing agents—whether these are unhealthy diets or infection-causing microbes—won't remain confined to any one country or region.

At the same time, governments, nonprofit agencies and corporations now have more medical, technological and financial tools than ever before to fight disease and promote wellness. Investors have a role, too. Those who want their dollars to have a positive social impact while also pursuing positive returns can look at three global trends likely to affect health care and health spending in the years to come.

The "Globesity" Problem

With billions of people in the developing world surging into the middle class and adopting Western diets and lifestyles, close to half the world's population could be overweight or obese by 2030, according to BofA Merrill Lynch Global Research. That's one reason why sales of diabetes drugs are expected to jump dramatically during the next several years, with IMS Health predicting $140 billion in sales by 2020. Moreover, the U.S. Food and Drug Administration has recently cleared several new weight-loss medications for sale, with more drugs in the pipeline. The global weight loss and weight management market is expected to reach $206.4 billion by 2019, according to market research firm MarketsandMarkets.

Additionally, makers of processed foods are responding with products that contain less fat, sugar and salt. Research firm Euromonitor International projects that the global market for so-called "health and wellness" products could reach $1 trillion by 2020. Naturally healthy food is the most promising category, currently valued at $276 billion globally, Euromonitor says.

Longer Lifespans, at a Price

The reason that global health and wellness are becoming a priority is good news—people are living longer, and the number of people worldwide age 60 and older is expected to exceed 2.1 billion by 2050, according to a 2015 United Nations report. But this longevity revolution will lead to more health concerns. For example, the number of people diagnosed with cancer annually is anticipated to rise from 14 million in 2012 to 22 million within the next two decades, while the incidence of Alzheimer's disease is projected to nearly triple by 2050, according to Alzheimer's Disease International.

The health-care sector should play a major role in caring for a world at rising risk of chronic disease, notes Nahal. For example, between 2015 and 2030, the cost of treating cardiovascular disease, the leading cause of death worldwide, is expected to increase by 84% according to the American Heart Association.

There is also accelerating innovation in the pharmaceutical industry. Advances in genomics and the plummeting cost of DNA sequencing are providing insights into the genetic and biological origins of diseases. And new drugs are being developed to take aim at specific disease-causing genetic mutations and other precise biological targets, an approach known as "personalized," or precision, medicine. In 2006, there were 13 drugs, treatments and diagnostic products for personalized medicine, according to the Personalized Medicine Coalition; by 2014 there were 113.

Preparing for the Next Pandemic

The Ebola outbreak of 2014 was a reminder that, historically, the world has experienced a major pandemic every few decades. "It's a question of when, not if" the next one will strike, says Nahal. Yet most governments remain unprepared for such an event.

With countries scrambling to improve preparedness, investors might look at the market for antivirals, which BofA Merrill Lynch Global Research expects to grow 7% annually to $46 billion by 2020. Another opportunity might involve the companies that have more than 120 new infectious disease vaccines in their product pipelines, according to the World Health Organization—in a market that could quadruple by 2025. Governments and nonprofits are also focused on making existing vaccines available to children in developing countries, and your investment could support their efforts. For example, the international organization Gavi ( has pioneered "vaccine bonds," highly rated fixed-income investments whose proceeds fund efforts to vaccinate children in remote corners of the world.

Biotechnology may play a big role in controlling pandemics, too. With genomic sequencing becoming less costly, scientists may better understand how disease-causing pathogens emerge, spread and mutate. "We think this represents a major opportunity for the life sciences sector," says Nahal.

A healthier world will require many things, not just innovation and government action but also greater awareness and empowerment of individuals and families. Investors have a role to play as well. And whether you're concerned most about general health and wellness, the world's aging population or the potential for a future pandemic, many opportunities could help you put your investments to work in promoting a healthier future.

3 Questions to Ask Your Advisor

  1. How can my investing help address global health problems?
  2. How can I take longevity into account in my portfolio?
  3. Which biotechnology firms are addressing "globesity"?

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Any information presented in connection with BofA Merrill Lynch Global Research is general in nature and is not intended to provide personal investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Investors should understand that statements regarding future prospects may not be realized.

BofA Merrill Lynch Global Research is equity research produced by Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or one or more of its non-U.S. affiliates. BofA Merrill Lynch Global Research does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.


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