Thanks to improvements in living standards, medicine and technology, Australians are living longer than ever before - driving a demographic shift that investors can't afford to ignore.
Life down under
In the 120 or so years since Australia's federation, average life expectancy has grown significantly - from roughly 55 years of age at the turn of the twentieth century to over 80 today.1
And since 1994, the proportion of the Australian population aged over 65 has surged by five percentage points to a hefty 17% - with Australia's median age increasing from 33.4 years to 38.3 years.2
This remarkable uptick in longevity has been largely driven by medical breakthroughs, better living standards and Australia's world-class healthcare system.
Indeed, other countries are seeing similar gains. The United Nations expects the number of people aged 65 and over will double between 2023 and 2050 - reaching a total of 1.6 billion worldwide.3 It's a megatrend that's driving some compelling opportunities for investors.
A shot in the arm for healthcare companies
One byproduct of an older population is accelerating spending on healthcare and aged care. With rising demand, spaces in aged care accommodation are expected to be in short supply and Australians will require increased medical treatment as they age. What's more, we may be entering a golden age of medical progress as AI technologies transform medical research, imaging, diagnosis and treatment.4
The companies riding this tailwind include pharmaceuticals, bio-techs, medical equipment manufacturers, medical technology companies, aged accommodation providers and the service providers that work directly with older patients. In the 10 years to 28 July 2025, the healthcare sector - as measured by the ASX200 Health Care index (XHJ) - returned 10.72% per annum. That's a stronger upturn than the 8.81% per annum recorded by the broader ASX200.5 Of course, past performance is not an indicator of future performance.
The tide is rising - which boats will float?
Given the breadth of businesses classified under the 'healthcare' banner, there are several ways investors can take advantage of this trend. Yet investors also need to be mindful that the rising tide of an ageing population won't lift every boat equally.
This is because investing in individual healthcare companies can carry high risk, particularly those linked to drug discovery and drug approval outcomes. Indeed, clinical drug trials average only a 10% success rate.6
What's more, healthcare companies are exposed to complex regulatory risks. It can take a long time before an investment in health research and development generates financial returns to investors, even for successful health innovations.
That's why using a professional investment manager can be a smart way to gain exposure to the healthcare sector.
A professional investment manager can use its specialist market knowledge and experience to help build a diversified portfolio of investments that taps into the growing demand for healthcare products. Equally important, a diversified portfolio can mitigate against the risk of individual companies performing worse than expected. It's about giving your investment the best chance for growth over the long term.
| Healthcare performance drivers | |
|---|---|
| Government spending | Federal government spending on healthcare is budgeted to reach $127.1 billion for the 2025-2026 financial year 7 |
| Innovation | Australia is ranked 9th place in global rankings for healthcare innovation8 |
| Inelastic demand | unlike discretionary spending, demand for medical services tends to remain relatively stable regardless of changes in price or income |
| Non-cyclical | long term spending programs and investment contracts help buffer the sector from short term factors |
How your Count Financial adviser can help
If you'd like to discuss how increased exposure to Australian healthcare companies could bring growth and diversification opportunities to your investment portfolio, talk to your Count Financial adviser. They'll be able to advise you on your options after taking into account your overall financial goals.
References for compliance approval:
1. Australian Institute of Health and Welfare, 'Deaths in Australia', Australian Government, 9 April 2025, accessed 28 July 2025
2. Australian Institute of Health and Welfare, 'Profile of Australia's population', Australian Government, 9 April 2025, accessed 28 July 2025
3. F Richter, 'The world's oldest populations', World Economic Forum, 22 February 2023, accessed 28 July 2025
4. CSIRO, 'CSIRO report highlights 'extraordinary era' of AI in healthcare', 27 March 2024, accessed 28 July 2025
5. S&P Global, S&P/ASX 200 Health Care, S&P/ASX 200, total return, 28 July 2025, accessed 29 July 2025
6. National Library of Medicine, Why 90% of clinical drug development fails and how to improve it?, 11 February 2022, accessed 28 July 2025
7. Australian National Audit Office, Health, Disability and Ageing | Australian National Audit Office (ANAO) Data excludes the NDIS. Accessed 28 July 2025
8. Freopp, Australia: #9 in the 2024 World Index of Healthcare Innovation, 20 December 2024, accessed 28 July 2025