Why investors should care about Access to Medicines

The Healthcare gap 

The generations living today have seen remarkable advances in global health over their lifetime. The ability to diagnose and treat a range of infectious and non-infectious diseases has vastly increased. Recent strides in producing vaccines using mRNA driven by the search for a COVID-19 vaccine have opened up the possibility of vaccinating against many other illnesses previously thought too difficult. The greater ease and lower cost of DNA testing are creating new areas of personalised medicine. And the development of biopharmaceuticals has led to new treatments for cancer, multiple sclerosis and other hard-to-treat, chronic conditions.

Despite these advances and their resulting benefit to human development, many essential medicines and healthcare products are unavailable and unaffordable for most of the world. The 80% of people in low and middle-income countries cannot even access basic vaccines and treatments, creating an unacceptable gap between the health outcomes of those in rich countries, and the billions of people in the rest of the world. This has devastating consequences, not just for the people in those countries but also for global heath security, as we recently saw in the COVID-19 pandemic.

Improving outcomes 

The Access to Medicines Foundation2 is an independent, non-profit organisation with a mission to stimulate and guide essential healthcare companies to bring their products to the billions of people who cannot afford basic healthcare. Their flagship Access to Medicines Index seeks to identify best practice in each of the areas it measures. Once identified, these are shared to accelerate their uptake by other pharmaceutical companies, to help raise the level of standard practice and to achieve greater access to medicine. This has helped to drive improvements in affordable access, manufacturing practises and increasing research allocation towards significant unmet healthcare needs. But there is a lot more that can be done in the areas of generic medicines (drugs no longer protected by chemical patents), access to diagnostics and vaccines, amongst others.

At Stewart Investors, we’ve been using the Access to Medicines Index since it was first published to analyse the companies we seek to invest in and to guide our engagements with them. This year, in recognition of the importance of their work, we entered into a strategic research partnership with them. In the short term, this will support the Foundation in their vital work to promote access to high-quality generic medicines. More broadly, it will also support the positive change they create across the healthcare and investment industries.

Access to medicines is a sustainability issue and an important investment issue for long-term investors. 

A franchise built on targeting a limited consumer base with expensive drugs is only sustainable for so long before it is eventually called into question by regulators, health care providers or the end consumers themselves. In contrast, providing available and affordable medicines to the 2 billion people living in low and middle-income countries creates a very large and growing consumer base. Rather than limiting a business to ageing populations that can afford the current high prices for medicines, finding businesses that can serve the customers of the future is a good starting point for investors.

Why investors should care

Seeking out high-quality companies, stewarded by exceptional people, with strong financials that enable them to contribute to, and benefit from, sustainable development, is the cornerstone of our investment philosophy. When it comes to healthcare companies, how they address equitable pricing and access to medicines in emerging markets are useful indicators of the quality of management and resilience of franchise. The work done by the Access to Medicine Foundation is important for our investment process, and we are excited to see the publication of their latest research on Access to Generics. As investors, we see this as an important tool to help build a picture of areas where generics companies can continue improving and where investors can focus their engagements to drive better health and business outcomes, raising the bar for what affordable and accessible medicine means worldwide.