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.
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Speaker 1 (00:00):
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 2 (00:05):
Right.
Speaker 1 (00:06):
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 eye sight is massive. Debora Lamby
from mil Fanact Management is with us.
Speaker 2 (00:18):
Now, Hey, Deborah evening, how are you?
Speaker 1 (00:21):
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 2 (00:28):
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 myopic 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,
(00:49):
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 eye sight. 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
(01:10):
pretty clear that prolonged screen time is not good for
your vision over the long term.
Speaker 1 (01:15):
So if you're looking at it from an investment perspective,
in this particular part of the market, who are the
main players?
Speaker 2 (01:21):
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 autho US company
called Cooper Vision. And historically the market has grown around
(01:42):
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. Now.
Speaker 1 (01:52):
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 that's
having an impact on the market, is it.
Speaker 2 (02:01):
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
(02:23):
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 1 (02:37):
Yeah, I mean that's massive. That's a huge jump in demand, right,
So can companies actually keep up with this increase?
Speaker 2 (02:43):
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 dynamic is expected to continue for a number of years.
And one of the benefits for companies is that operating
(03:05):
in a simply constrained environment has allowed them to maintain
strong prices for their lenses, which has been good for
industry growth.
Speaker 1 (03:11):
So how have the shares of these companies performed then, Yeah.
Speaker 2 (03:14):
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 A up around seven percent,
but that's more diversified, with Visioncare only making up around
five percent of their total revenue. So given the aging populations,
(03:34):
increasing screen time, and the shift to daily 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.
Speaker 1 (03:45):
In fascinating stuff. Debraah, thanks for chatting us through. There's
Debra Lambia of Milford Asset Management.
Speaker 2 (03:49):
For more from Heather Duplessy Allen Drive listen live to
news talks that'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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 2 (00:05):
Right.
Speaker 1 (00:06):
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 eye sight is massive. Debora Lamby
from mil Fanact Management is with us.
Speaker 2 (00:18):
Now, Hey, Deborah evening, how are you?
Speaker 1 (00:21):
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 2 (00:28):
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 myopic 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,
(00:49):
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 eye sight. 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
(01:10):
pretty clear that prolonged screen time is not good for
your vision over the long term.
Speaker 1 (01:15):
So if you're looking at it from an investment perspective,
in this particular part of the market, who are the
main players?
Speaker 2 (01:21):
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 autho US company
called Cooper Vision. And historically the market has grown around
(01:42):
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. Now.
Speaker 1 (01:52):
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 that's
having an impact on the market, is it.
Speaker 2 (02:01):
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
(02:23):
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 1 (02:37):
Yeah, I mean that's massive. That's a huge jump in demand, right,
So can companies actually keep up with this increase?
Speaker 2 (02:43):
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 dynamic is expected to continue for a number of years.
And one of the benefits for companies is that operating
(03:05):
in a simply constrained environment has allowed them to maintain
strong prices for their lenses, which has been good for
industry growth.
Speaker 1 (03:11):
So how have the shares of these companies performed then, Yeah.
Speaker 2 (03:14):
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 A up around seven percent,
but that's more diversified, with Visioncare only making up around
five percent of their total revenue. So given the aging populations,
(03:34):
increasing screen time, and the shift to daily 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.
Speaker 1 (03:45):
In fascinating stuff. Debraah, thanks for chatting us through. There's
Debra Lambia of Milford Asset Management.
Speaker 2 (03:49):
For more from Heather Duplessy Allen Drive listen live to
news talks that'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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