Hi All,
I wanted to contribute a top down macro opinion as naturally we are often buried in the detail with specific company details.
Many of you will have heard WP refer to the demographic shifts briefly in one of his recent interviews so hopefully this resonates.
I was recently reading a macro piece about what the aging population means for growth globally and was drawing some interestingly conclusions with respect to what this means for Admedus. The presentation I read was quite long but I will try and summarise the key takeaways.
Global populations are aging, this we know. The large baby boomer generation is retiring and working age populations are shrinking. Globally, demographic change is producing a slower growth rate, lower interest rate, government budget constrained environment.
Retirees allocate more income to healthcare versus other cohorts. As longevity increases and the proportion of retirees rises, we expect substantial growth in healthcare spend. Amid rising costs and strapped government budgets, lower cost approaches to healthcare solutions will increase in popularity. Additionally, the growing middle class in Asia will also drive demand for affordable healthcare.
Translating the above through an Adapt platform lens (including 3D products, TAVR, etc) this theme bodes well for our clinically superior products. The durability and lack of calcification properties mean the products are replaced less often leading to lower costs and strains on the healthcare system. We have already seen the evidence of the move towards smarter solutions with our recent GPO tender win, its significance should not be underestimated. Bodies such as the GPO and IDN’s which we are tendering for will be aware of the above themes and will be proactively seeking out innovative products such as those which Admedus can deliver. We now have a foot in the door where previously we wouldn’t have got a look in! The population longevity also bodes well for the SAVR v TAVR debate, TAVR being less invasive and more palatable choice for the elderly in particular.
A couple of country specific themes ans statistics below:
Europe will remain the oldest region for the next 15 years and North America will rank second oldest, with their over 65 population shares rising to 22.8% and 20.7%, respectively.
The aging German population (second oldest after Japan) will have greater needs for affordable and accessible healthcare than most peers. The missteps in Germany have been addressed according to WP, this further reinforces his AGM comments that if you don’t have Germany on board you’re nowhere (or words to that effect).
Japan is and will remain home to the worlds most aged population with 30.3% of the population aged over 65 by 2030. This will have greater demand for affordable and accessible healthcare. Japan is the second largest market for medtech and the Japan regulatory assessment is in process
While Europe Has Historically Been the Oldest Region. Asia and Latin America Are Aging Rapidly.
China's prior one-child policy has accelerated the aging demographic. We expect China's elderly share to rise to 17.1% in 2030, from 10.1% in 2015. China Clinical Registration Trial (first step in the process towards approval) expected in Q2 this year
Mexico – Healthcare is only four percent of the Mexican consumer spend today, but it is expected to grow at 4.4% CAGR over the next 10-15 years. In particular, obesity-related health issues could loom large. Mexicans drink 163 litres of soft drinks per year (highest in the world). Obesity is thus a big problem, with heart disease and diabetes the largest cause of mortality. Mexico approval is expected in Q2 this year as is Columbia. Argentina and Brazil are expected in 2019 and 2020 respectively.
I think it is no coincidence that the key markets this article identified are also the markets that Admedus is playing in or seeking regulatory approval in. Our clinical superiority provides the unassailable moat around the company and the cyclical demographic shifts will provide a long runway of growing demand and in turn growing revenues and profitability.
The opportunity before us is truly profound, we are in the right place at the right time in the context of these long term cyclical themes.
Now we need to execute the strategy, this takes time and patience (yes i'm aware i'm asking long suffering shareholders for more) but we are starting to see the green shoots of that strategy and growth with respect to Adapt in the last 4C and GPO win.
Remember that WP has only been permanent CEO for a year and The Saint on board for less than 12 months! As shareholders a year can feel like a lifetime as you constantly check the price and live every peak and trough but in the context of things this is a very short time and I think what the business has fundamentally achieved in the last year is truly incredible. Remember a share price is a function of supply and demand, demand will come once the fundamentals are irrefutable. When that happens I will leave up to the individual to speculate on.
Happy investing, Chris
Expand
(20min delay)