Profit From the Longer Life Spans, Part 2

Yesterday I shared some of the statistics to back up the simple fact that we in the U.S. are living longer, and that our overall population is skewing older. As with other secular shifts, this brings all sorts of opportunities for companies to address the change -- and that makes for a fertile target market for you, the investor. We in the U.S. are hardly alone in this, and in fact Canada, Japan and most of Europe have older populations than the U.S. does. According to population projections from the United Nations, the global population aged 65 and older will triple over the next 40 years, from 500 million in 2010 to 1.5 billion by 2050, thus increasing the share of elderly people from 8% to 16%. There is a shift toward older age brackets in almost every country as people live longer and have fewer children. • This year, 25.8% of Japan's population is aged 65 or older, and 32.2% are expected to be senior citizens there by 2030. • Germany has 17 million people who are aged 65 and older, and that number is expected to swell to 21 million by 2030. • By 2030, there are projected to be nearly 16 million retirees in Italy, and 25.5% of Italian citizens are anticipated to be 65 or older. • There are 8.4 million Spanish senior citizens, aged 65 or older, and they comprise 17.6% of Spain's population. Those numbers are estimated to grow to 11.5 million in 2030, when senior citizens are expected make up 22% of the population. How does this stack up against to what it used to be? Per historical data from the UN, life expectancy was 65 years in 1950 in the more developed regions, as compared with 42 years in the less developed regions. (Note that the latter number was heavily skewed by higher child-mortality rates.) By the 2010-to-2015 period, these figures are estimated to be 78 years in the more developed regions and 68 years in the less developed regions. The gap is expected to narrow even further: By 2045 to 2050, life expectancy is projected to reach 83 years in the more developed regions, and 75 years in the less developed regions. The number of older persons was 841 million in 2013, four times higher than the 202 million seen in 1950. The older population is expected to nearly triple by 2050, when this number is expected to surpass the two-billion mark. Said another way, the proportion of the world's 60-or-older population is expected to increase to 21%, up from 12% in 2013 and 8% in 1950. There is no doubt that this will be a target-rich and global market for companies looking to address the changing demographic landscape. There are, of course, the pharmaceutical companies and medical and dental supply companies I mentioned yesterday. But, aside from this, there is a whole host of other companies that include real estate investment trusts (REITs) such as Omega Healthcare Advisors (OHI), Senior Housing Properties (SNH) and Ventas (VTR). Another aspect to consider, as the population skews older, will be the desire to appear younger. Chalk it up to vanity, but there is never a shortage of people looking for the fountain of youth. When we couple this with the rising disposable incomes in the emerging-market countries, we see it offers long-term potential among such companies as Estee Lauder (EL), Nu Skin Enterprises (NUS), Proctor & Gamble (PG), Coty (COTY), all of which offer fountain-of-youth-type products. Some prefer more aggressive treatments to appear younger -- which, yes, means plastic surgery, hair replacement and other procedures. That, in turn, means looking at companies such as Cynosure (CYNO), Zeltiq Aesthetics (ZLTQ) and Cutera (CUTR). Say what you will about the economy, but according to the American Society of Plastic Surgeons (PDF), cosmetic procedures are on the rise -- 15.1 million were done in 2013, up from 14.7 million in 2012 and 7.4 million in 2000. Fitting with the aging theme, the top five performed procedures were breast augmentation, rhinoplasty, eyelid surgery, liposuction and face lifts. It's no surprise to find that, while the U.S. may be the market-share leader when it comes to cosmetic procedures, we are -- again -- far from alone. Rounding out the top five in 2013 were Brazil, Mexico, Germany and Spain, per the International Society of Aesthetic Plastic Surgery (PDF).

Profit From the Longer Life Spans, Part 2

The trend is global, and the investment opportunities extend beyond health-care companies.

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