On the 20th anniversary of World Cancer Day, Candriam fund manager Rudi Van den Eynde makes the case for oncology investment.
Finding the cure for cancer – it stands alongside eradicating poverty, tackling climate change and universalising human rights as having come to epitomise humanity’s struggle for a better world. It has attracted billions of dollars in funding, formed the subject of a vast, ever-expanding body of research and led to the development of numerous dedicated organisations and charities. It has inspired huge strides in science and medicine, and has both benefitted from, and brought about, cutting-edge technological innovation.
So, we’ve seen the drive to cure cancer appear in just about every context, from science labs and college textbooks to charlatan claims and conspiracy theories. One area, however, that receives less attention is investment. And while investing in oncology – the branch of medicine that deals with the prevention, diagnosis and treatment of cancer – might not always catch as many headlines, it offers some exciting opportunities for investors looking to both generate returns and deliver a powerful social impact.
To gauge the size of the market for oncology, we must start by reviewing the scale of the threat presented by its driver: cancer. Cancer is not a single disease, but a multitude, comprising of over 100 types. This pervasiveness has made cancer the second leading cause of death globally. Unsurprisingly, the economic impact of this is huge. The 2014 World Cancer Report estimated the total annual economic cost of cancer at over $1 trillion.
Emerging in response to this threat is the global market for oncology. Oncology is tackled by many healthcare sub-sectors, including pharmaceuticals, biotechnology, medical technology, life science equipment and healthcare services. And the market for oncology isn’t just large – it’s growing. Global spending on therapeutic and supportive care for cancer is expected to rise from $120 billion in 2016 to $240 billion in 2023. This corresponds to a compound annual growth rate of 11%, significantly outpacing the growth seen in other markets focused on combatting disease.
This growth is being driven by a number of key factors, which are expected to continue and, in some cases, intensify in the long term. On the demand side of the equation, the main factor driving growth is the world’s ageing population. Almost 9 in 10 cancer cases occur in people over the age of 50. As the rate of population ageing continues to go up – with experts predicting the proportion of people over the age of 65 to double by 2050 – the scale of the threat posed by cancer will go up in tandem..
Supply-side factors are also driving growth in this market. As with many industry verticals, technology, as an industry horizontal, is profoundly shaping all aspects of oncology – from R&D, to screening, to treatment. Just last month, for instance, it was announced that Google Health’s AI model spotted breast cancer in de-identified screening mammograms with greater accuracy than experts.
Another factor boosting market supply is collaboration. Sub-national ecosystems of physicians, pathologists, diagnosticians and tech specialists have sprung up, permeating the field with new tools and strategies. New opportunities for collaboration are also transforming the capabilities of emerging companies, with the capacity to outsource research, process and commercial functions helping numerous new entrants come to market.
To recap then, yes, the oncology market is large and yes, it demonstrates clear long-term growth potential. So the question your now asking is: how do I get involved? While oncology investment still sits outside the mainstream, the Cure strategy that we manage offers direct exposure to this market. And while you invest in cancer solutions, both Candriam and Belfius donate a portion of their revenues each year to leading cancer research institutes. Two ways to get involved.
Our core investment philosophy is: doing well by doing good. Meaning that we aim to find those drugs, devices or diagnostics that can improve the lives of patients. Those solutions will be used by patients and doctors and the companies providing them will likely turn out to be good investments. We are most pleased with how that turned out in 2019. It was a fruitful year in the fight against cancer for patients and investors alike. The year brought 12 new FDA drug approvals in oncology, and we are proud to have been invested in the companies registering 8 of those 12 drugs.
We will continue to do our uttermost best to again spot those companies and drugs that make a difference to patients, and in turn reward the investors that made it all possible by supporting the right companies.