Dr Jenna Denyes, Senior Healthcare Analyst, details the significance of GAM signing up to an initiative aimed at allowing access to Covid-19 vaccines and examines the role of sustainability in healthcare sector investments.
Along with close to 150 other institutional investors, GAM co-signed a joint call for increased financing of the ACT-Accelerator dedicated to ensuring equitable access to Covid-19 tools. This initiative was driven by the Access to Medicine Foundation, whose recently updated Access to Medicine Index 2021 included an entire section on the Covid response. The updated index is one of the tools we use to assess the ESG priorities of our positions and provides an invaluable source of information on not only what companies are currently doing, but what they could be doing in an ideal world. The publication of the new index has served as an excellent catalyst to re-examine the role of sustainability in investment in the healthcare sector. It is easy to point to a return on investment in the healthcare sector as an economic driver for investment, but could that investment actually be driving broader economic gains?
The cost of uneven access to medical case is undeniable, but in developed countries it is one which is easy to overlook. The human cost is straightforward to see and grasp, but we often struggle with the economic cost of uneven access. The Covid crisis has painted a stark picture. Current vaccine distribution is massively uneven with close to all doses going to a handful of highly developed countries; this is forecast to cost the global economy close to USD 9.2 trillion – with half of this amount lost from advanced economies.1 This is an example of how one contagious disease, albeit an extremely damaging and disruptive one, can impact the global economy. The McKinsey Global Institute2 identified the potential for an 8% increase in global GDP by 2040 through improved access to healthcare. In lower and middle income countries, these gains can be achieved with foundational level care; childhood immunisation, safe childbirth, better nutrition. In developed countries, they turn to innovative treatments addressing unmet medical need to drive these gains; specifically where we invest.
The moral case for investing in companies that recognise their role as global citizens is an easy one, but it is important to realise the business case is there as well, not only in a longer return on investment, but also growth in the global market as a whole. Investing in the healthcare sector can be sustainable, can drive global growth, and can couple direct returns with improved access to medical care across the globe. The Access to Medicine Index is one of the tools to use to identify those companies, and it is an organisation that GAM is proud to work with.
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