Avoiding the perils and pitfalls for high impact healthcare investment

Investing in healthcare companies seems an obvious choice for sustainable investors. After all, any company that helps cure disease, and improve health and wellbeing must be making a positive contribution to sustainable development.

However, the interplay between patients, doctors, governments and healthcare companies brings potholes and landmines for sustainability-focused investors. Consider the US$4.45bn healthcare companies spent on lobbying in the US over the 22 years to March 20201; a third higher than the next highest spending industry. Or that some companies spend more on marketing than they do on research and development (R&D), despite using R&D as justification for high prices.2 Or the finding of a 2014 study that doctors receiving payments from pharma companies prescribe more of the pharma companies’ drugs, even when cheaper generics are available.3

Like any other sector, healthcare has good and bad companies; some have a history of scandals going back decades.4 While rules are tightening globally in some of these areas, the difficulty of finding truly sustainable healthcare companies remains.

  1. Healthcare is about human health outcomes, not about Global Industry Classification Standard (GICS) sectors or benchmarks.
  2. The business model of a sustainable healthcare company should deliver access and affordability, preferably to large underserved markets. 
  3. Sustainability and corporate quality are deeply intertwined - for good and for bad. 
  4. Stewardship, ethical leaders and strong cultures are as important as any quantitative factor in assessing healthcare companies.

This article explores each of the areas outlined above. You can explore the healthcare companies we own by visiting our microsite and filtering the interactive map by Sustainable Development Goal 3 – Good Health and Wellbeing.

Healthcare is about human health outcomes, not about GICS sectors or benchmarks