As the world's ageing population is expected to grow over the coming decades, investors have turned their attention to vision care.
As people get older, the need for corrective lenses and treatment goes up - meaning investors are looking to take advantage of increased demand.
Milford Asset Management analyst Deborah Lambie reveals the companies that stand to benefit from this.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
You're listening to a podcast from news talk s'b follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Now, the issue of aging populations is becoming more and
more of a focus for investors because get this, I
mean this is massive.
Speaker 3 (00:22):
Right.
Speaker 2 (00:23):
Globally the number of people aged over sixty is going
to double and those over eighty is going to triple
just in the next twenty six years. And of course
the implications for our eyesight is massive. Debora Lamby from
Milford Act Management is with us.
Speaker 3 (00:35):
Now, Hey, Deborah evening, how are you?
Speaker 2 (00:37):
I'm well? Thank you? Now, vision care is becoming more critical, right,
not just for individuals but investors as well. What's going
on here?
Speaker 3 (00:44):
So right now, globally around one and three people are
myopical short sighted, but by twenty fifty, that number will
jump to nearly one and two, so every second person
will be either myopical or short sighted. And there's a
couple of factors behind this. So firstly, aging populations, which
you've already mentioned. As we get older, our eyes naturally
change and people are more likely to need corrective lenses,
(01:05):
whether that's glasses or contact lenses. And then secondly, increasing
screen time. So have you ever wondered how much our
daily screen habits are picked our eyesight. We are now
nearly a decade on from the launch of the iPhone four,
which is widely thought to have mean the mass driver
of mass smartphone adoption, with the whole world now moving
towards increased screen time, and so it's become pretty clear
(01:28):
that prolonged screen time is not good for your vision
over the long term.
Speaker 2 (01:32):
So if you're looking at it from an investment perspective,
in this particular part of the market, who are the
main players?
Speaker 3 (01:38):
Yeah, So the global contact lens market, it's around sixteen
billion dollars in size, and there's three big players that
control ninety percent of that market. So there's a Swiss
company called Alcon, along with US companies Johnson and Johnson,
which you probably know from products like band aids, Johnson
baby products, and Listerines. And then there's author US company
called Cooper Vision. And historically the market has grown around
(01:59):
five percent a year, but over the past few years,
with those factors that we've talked about, growth has been
accelerating to just under ten percent a year.
Speaker 2 (02:08):
Now, I've been hearing that what's going on is that
there are people who previously might have used like monthly
contact lenses now using daily contact lenses. I imagine that's having
an impact on the market, is it.
Speaker 3 (02:18):
That's a great point. We are witnessing a major shift
there as well. So people are moving from as you've said,
monthly or biweekly lenses, which lasts for two to four weeks,
to daily disposable lenses, which are worn for just once
a day. And daily lenses they offer they're more convenient
and comfortable, lower risk of infections, and also thanks to
manufacturing advancements, they're also becoming more affordable. So this shift
(02:39):
is led to a dramatic increase and the volume of
lenses being used worldwide. So if you're using monthly lenses,
you need twenty four lenses a year, so one per
I per month. But with the daily lenses, you need
around seven hundred lenses per year, so that's nearly thirty
times more.
Speaker 2 (02:54):
Yeah, I mean that's massive. That's a huge jump in demand, right,
So can companies actually keep up with this increase?
Speaker 3 (03:00):
So in short, not yet. Demand for these products has
been stronger than what the companies can actually produce, and
all of the main players have been investing a lot
over the past few years to build out capacity, but
they are still selling lenses faster than they can make them,
so it takes time for new factory lines to come
online and this dynamic is expected to continue for a
number of years. And one of the benefits for companies
(03:21):
is that operating in a simply constrained environment has allowed
them to maintain strong prices for their lenses, which has
been good for industry growth.
Speaker 2 (03:28):
So how have the shares of these companies performed then, Yeah.
Speaker 3 (03:31):
These companies have been pretty solid performers, especially given they
operate in a more defensive part of the market. So
so far just this year, our con shares are up
around twenty five percent, Cooper shares are up around fifteen percent.
Shares in Johnson and Johnson are up around seven percent,
but that's more diversified, with vision care only making up
around five percent of their total revenue. So given the
aging populations, increasing screen time, and the shift to daily
(03:54):
contact lenses, the contact lens market is really in a
period of transformation and it's the space that invests are
becoming interestingly increasingly interested in.
Speaker 2 (04:02):
Oh fascinating stuff. Debraah, thanks for chatting us through there's DEBRAA.
Lambi of Milfed Asset Management.
Speaker 1 (04:06):
For more from News Talks b live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
You're listening to a podcast from news talk s'b follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Now, the issue of aging populations is becoming more and
more of a focus for investors because get this, I
mean this is massive.
Speaker 3 (00:22):
Right.
Speaker 2 (00:23):
Globally the number of people aged over sixty is going
to double and those over eighty is going to triple
just in the next twenty six years. And of course
the implications for our eyesight is massive. Debora Lamby from
Milford Act Management is with us.
Speaker 3 (00:35):
Now, Hey, Deborah evening, how are you?
Speaker 2 (00:37):
I'm well? Thank you? Now, vision care is becoming more critical, right,
not just for individuals but investors as well. What's going
on here?
Speaker 3 (00:44):
So right now, globally around one and three people are
myopical short sighted, but by twenty fifty, that number will
jump to nearly one and two, so every second person
will be either myopical or short sighted. And there's a
couple of factors behind this. So firstly, aging populations, which
you've already mentioned. As we get older, our eyes naturally
change and people are more likely to need corrective lenses,
(01:05):
whether that's glasses or contact lenses. And then secondly, increasing
screen time. So have you ever wondered how much our
daily screen habits are picked our eyesight. We are now
nearly a decade on from the launch of the iPhone four,
which is widely thought to have mean the mass driver
of mass smartphone adoption, with the whole world now moving
towards increased screen time, and so it's become pretty clear
(01:28):
that prolonged screen time is not good for your vision
over the long term.
Speaker 2 (01:32):
So if you're looking at it from an investment perspective,
in this particular part of the market, who are the
main players?
Speaker 3 (01:38):
Yeah, So the global contact lens market, it's around sixteen
billion dollars in size, and there's three big players that
control ninety percent of that market. So there's a Swiss
company called Alcon, along with US companies Johnson and Johnson,
which you probably know from products like band aids, Johnson
baby products, and Listerines. And then there's author US company
called Cooper Vision. And historically the market has grown around
(01:59):
five percent a year, but over the past few years,
with those factors that we've talked about, growth has been
accelerating to just under ten percent a year.
Speaker 2 (02:08):
Now, I've been hearing that what's going on is that
there are people who previously might have used like monthly
contact lenses now using daily contact lenses. I imagine that's having
an impact on the market, is it.
Speaker 3 (02:18):
That's a great point. We are witnessing a major shift
there as well. So people are moving from as you've said,
monthly or biweekly lenses, which lasts for two to four weeks,
to daily disposable lenses, which are worn for just once
a day. And daily lenses they offer they're more convenient
and comfortable, lower risk of infections, and also thanks to
manufacturing advancements, they're also becoming more affordable. So this shift
(02:39):
is led to a dramatic increase and the volume of
lenses being used worldwide. So if you're using monthly lenses,
you need twenty four lenses a year, so one per
I per month. But with the daily lenses, you need
around seven hundred lenses per year, so that's nearly thirty
times more.
Speaker 2 (02:54):
Yeah, I mean that's massive. That's a huge jump in demand, right,
So can companies actually keep up with this increase?
Speaker 3 (03:00):
So in short, not yet. Demand for these products has
been stronger than what the companies can actually produce, and
all of the main players have been investing a lot
over the past few years to build out capacity, but
they are still selling lenses faster than they can make them,
so it takes time for new factory lines to come
online and this dynamic is expected to continue for a
number of years. And one of the benefits for companies
(03:21):
is that operating in a simply constrained environment has allowed
them to maintain strong prices for their lenses, which has
been good for industry growth.
Speaker 2 (03:28):
So how have the shares of these companies performed then, Yeah.
Speaker 3 (03:31):
These companies have been pretty solid performers, especially given they
operate in a more defensive part of the market. So
so far just this year, our con shares are up
around twenty five percent, Cooper shares are up around fifteen percent.
Shares in Johnson and Johnson are up around seven percent,
but that's more diversified, with vision care only making up
around five percent of their total revenue. So given the
aging populations, increasing screen time, and the shift to daily
(03:54):
contact lenses, the contact lens market is really in a
period of transformation and it's the space that invests are
becoming interestingly increasingly interested in.
Speaker 2 (04:02):
Oh fascinating stuff. Debraah, thanks for chatting us through there's DEBRAA.
Lambi of Milfed Asset Management.
Speaker 1 (04:06):
For more from News Talks b live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!