Positive Outcomes summary
Positive Outcome companies are those where benefits for people and the planet make up the majority of their business, and which are held in NZ retail funds. Mindful Money has a rigorous process to select candidates and regularly reviews their ongoing eligibility.
Explanation of Health Theme
Companies in this theme are focused on lifting healthcare outcomes across the world to improve quality of life and life expectancy.
Over the past two decades, global health outcomes have improved dramatically: malaria deaths have fallen, millions of children and mothers are surviving conditions that were once fatal, and life expectancy has risen. Yet there are still large gaps in access to drugs, particularly in low and middle income countries (LMICs). For instance, HIV is now a disease that can be treated effectively, yet there can be many barriers which get in the way of people getting access to life saving medicines.
Developed economies are facing challenges of ageing populations, alongside rising rates of some conditions, e.g. mental health, diabetes, and cancers at the same time as governments struggle to fund public health services at the levels needed. Innovations in drugs, equipment and diagnosis can support better management of conditions. This improves efficiency for public funds and better outcomes for patients.
Sub-categories and criteria
1) Healthcare Access: Companies improving access to treatments for priority conditions in underserved populations (as outlined in the UN’s SDG3 targets). Mindful Money has used the Access to Medicines index which analyses the quality of performance of drug companies on increasing access. We have set a high threshold for selection of companies.
2) Innovation in Treatments: Companies developing treatments for key SDG3 targets, which cover infectious diseases and non-communicable diseases. This category also includes innovations to improve mental health (especially valuable in NZ due to our globally high suicide rate), and conditions relating to ageing (e.g. hearing loss and dementia). We also looked at whether treatment innovations support better efficiency for public health budgets.
3) Innovation in Devices or Equipment: Companies developing innovative devices or equipment to improve outcomes for patients. This includes devices that improve quality of life and technologies for earlier diagnosis, better self-management of a condition, or that enable less invasive procedures. We also assess potential to reduce treatment costs for health systems.
Note, we have been very selective in including large pharmaceutical companies. Profit drivers can create misalignment between need and access. Complex regulation and sector dynamics also creates inherent risks of compliance breaches. There are also persistent research and development gaps for diseases affecting LMICs, such as pneumococcal disease (PCV), RSV in infants, and tropical diseases. We also excluded any company with recent major controversies.
We have not included companies that focus on alternative therapies such as health supplements or health aids. While people may find these helpful, they are not subject to the same levels of rigorous testing for outcomes as pharmaceuticals or medical devices that need regulatory approval before going to market.
Why is each sub-category important?
Healthcare Access
One third of the world’s population does not have access to essential medicines. The pharmaceutical industry plays a major role in developing new medicines and reaching underserved communities. Best practice actions for improving access include; having access plans for new drugs to reach LMICs as soon as possible (e.g. for malaria), providing licences for generic makers to produce the drug locally, and tiered pricing to make drugs affordable. Some companies have research and development pipelines that focus on conditions that are major issues for LMICs such as Tuberculosis, HIV and Malaria.
Company example: Novartis
This large Swiss based multinational pharmaceutical company ranks first on the Access to Medicines index (2024) due to the quality of its programmes to increase access for underserved populations. Novartis holds executives to account for delivery with annual targets. The company has specialist drugs for malaria and cardiovascular, renal, and metabolic diseases.
Innovation in Health Treatments
Many conditions that once required hospital care and invasive surgery are increasingly being treated with drugs or other therapies. These include immunotherapies, personalised vaccines, and advanced biologics that target disease at the molecular level. Many drugs can now reverse, delay or prevent progression of conditions, leading to better quality of life and improvements in life expectancy.
Large pharmaceutical companies have resources for large research and development programmes. They can manage the long development time-frames, from identification of a drug candidate to its reaching patients, by having drugs at different points in their lifecycle. Equally, newer biotech companies can lead innovation in very specific problems, by focusing their research and development effort on novel solutions for one condition.
Company example: Aroa Biosurgeries
This Auckland based company (listed on the Australian stock exchange) makes regenerative tissue technology to repair chronic, difficult to heal, wounds. Founder, veterinary surgeon Dr Brian Ward, discovered the stomach lining of young sheep (waste from the meat industry) had unique healing properties. Aroa’s sterile tissue products create natural scaffolds for the body to repair itself. Aroa has sold 7 million products worldwide, helping patients with chronic wounds (like diabetes ulcers) or deep traumatic wounds to heal faster.
Health Device or Equipment
Innovation in health equipment (e.g. robots) can improve how hospital treatment including surgery is done. New tools for diagnosis (sometimes supported by AI) can diagnose conditions sooner at the time when they can be treated more effectively. Personalised connected devices, like glucose monitors, help people manage chronic conditions at home. All these advances improve outcomes for patients and access to care. They can also lower costs and ease pressure on hospitals.
Company example: Fisher & Paykel Healthcare
The largest company on the New Zealand stock exchange is a global leader in respiratory care systems used in intensive care units around the world. Their machines deliver warm, humidified oxygen to patients requiring respiratory support. This ensures that fewer ICU patients need intubation, stays in the ICU are shorter (saving public health budgets) and more people survive. For NZ, where there are relatively fewer technology job opportunities, F&P employs nearly 4,000 people in its Auckland campus.
Investment considerations relating to this theme
Health is a theme where we all benefit from its positive outcomes (directly, or in our whānau or communities). It has potential for long-term capital growth and ongoing dividends due to opportunities for revenue growth from new treatments and rising demand to meet the challenges from global disease rates and ageing populations.
However, it is a sector with structural complexity and many factors which can influence revenues and share-prices. Risks include technical factors, pricing pressures, patent expiries, regulations and the high cost of research and development. Start-ups in healthcare can take a long time to reach profitability and need to secure ongoing funding to survive during the research and development phase. Active investment in healthcare therefore requires specialist knowledge.
Most funds will have some exposure to health within portfolios diversified across sectors and geographies. For investors with particular interest in the theme it is also possible to invest in specialised ETFs or Australian funds. Funds that invest in NZ and with a focus on growth will have high exposure specifically to Fisher & Paykel (simply as a function of its position as the No.1 company on the NZ Stock Exchange).