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Health for wealth

The argument for the long-term potential of the healthcare sector is

compelling. Across the developed world, people are living longer. This

demographic trend is one of the most significant of our time and studies

suggest it willcontinue well into the next century. For investors who want

to seek out the benefits of this trend, an investment in the health sector

is an obvious answer.

Improved living conditions are helping to keep us fitter for longer and

illnesses which once proved fatal in middle age have become treatable. We

are enjoying good health wellinto retirement and living far beyond the age

of our predecessors.

But as we grow older, the chances that we will require intensive

healthcare increases. The diseases we associate with old age often leave

the patient partially or fully disabled and in need of care. This care

could be required part-time, in the patient&#39s own home, or full-time,

through a form of sheltered accommodation.

Either way, the care has to be funded. With the very old, who are the

heaviest consumers of healthcare becoming the fastest-growing age group,

costs can only rise.

Demand for healthcare is increasing on two fronts – the need to treat now

curable diseases and to meet the demand for intensive care in later life.

In all developed countries, expen-diture on healthcare has been rising and

this at a time when governments are facing pressure to limit public


The answer to the problem lies in product innovation and new technology.

For example, developments in less invasive surgical techniques are reducing

the requirement for hospital stays so more people can be treated and fewer

beds are needed.

Many medical problems with inadequate treatments, such as cancer and

Alzheimer&#39s disease, cost the state an enormous amountin ongoing care.

Any company providing products at a lower cost or with greater efficiency

will find themselves in great demand.

The sector is seeing a stream of new businesses emerge which, with the

right approach, have exceptional potential for growth. With many

developments still to come, the trend looks set to continue for many years.

One – if not the – example of our lifetime is the research into mapping of

the human genome.

The Human Genome Project and PE Celera (run by Craig Vintner) both

announced the completion of their projects just a couple of weeks ago and,

as President Clinton said: “This will have a real impact on all our lives –

and even more, on the lives of our children. It will revolutionise the

diagnosis, prevention and treatment of most, if not all, human diseases.”

In other words, this is not the end of a project, it is just the

beginning. Genomics research should lead to the ultimate identification of

thousands of new therapeutic targets, enabling drug companies not only to

develop new therapies but also to identify which patients will respond to

these therapies and which willsuffer adverse consequences from them.

Ultimately, and more controversially, it should also make possible the

advent of “personalised” medicine with genotyping tests identifying a

patient&#39s susceptibility to particular diseases and allowing a more

reliable match with the appropriate therapy.

Work is now under way to understandthe functions of each individual gene

andto identify the part it plays in developmentand in disease.

Using a combination of advanced statistics, tens of thousands of near

identical drugs can be produced and new robotic techniques allow these to

be tested simultaneously, cuttingdevelopment time dramatically.

The companies which successfully apply such technologies and introduce the

next generation of drugs are likely to earn very high profits.

The healthcare sector can be incorporated into any client&#39s portfolio. The

sector provides exposure, not just to the US market, but to all

international markets, and also provides an exceptional opportunity to

enhance growth.


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