As good as it gets
In the world of investing, we don’t get inevitabilities. We deal in probabilities. Nothing is certain. But sometimes, just sometimes, we find high probability events. And that’s as good as it gets. In our view, the prospect of increased healthcare spending over the next few decades is one such high probability event. In Part 1, our rationale was hinged on these factors amplifying each other, especially in Asia & Africa:
- An increase in ageing, “prime healthcare” population over the next few decades…
- Rising GDP and GDP per Capita…
- Increase in healthcare spend as a % of GDP – to catch up with Developed Countries.
We had concluded that a 5-7% annual growth rate in healthcare demand over the next couple of decades would be a reasonable assumption. This helped give us some context to bottom-up valuations when we get to them – assuming something much higher than 5-7% would be callous unless we find a company that makes a darn good product with no credible competition.
In the next few sections, we take more of a bottom-up view of the healthcare landscape to compare with our top-down view…