A Healthier economy?
Over the last year or so, investor enthusiasm for new obesity-fighting medications has come in second only behind artificial intelligence. And, as with AI, economists are beginning to consider the long-term economic repercussions.
Beyond the introduction of medications like Ozempic and Wegovy, there is a broader wave of healthcare innovation underway. Gene editing medicines are becoming available for an increasing number of disorders. AI has the ability to develop new therapies and preventative methods. Then there are discoveries in vaccine creation using mRNA technology, as well as improvements in diagnostics for diseases such as Alzheimer’s.
The potential is attracting significant funding. Goldman Sachs Group Inc. reports that the money put into US healthcare venture capital funds has more than doubled since 2019. The Wall Street bank’s equity experts predict that investment in the healthcare sector would increase by 34% this year, reaching about $900 billion.
All of this has prompted Goldman Sachs economists to consider the implications for their own field. “Historically, health advancements have lowered the number of life years lost to disease and disability by 10% per decade” in developed nations, wrote Joseph Briggs and Devesh Kodnani in a note this week.
The United States stands to benefit the most among developed nations, despite the fact that Americans are more obese and unhealthy. Better health conditions for the American population could boost GDP over time as it allows for more labor force participation.
“We estimate that poor health subtracts more than 10% from the level of US GDP,” the Goldman analysts said. Looking alone at Wegovy, Ozempic, and other so-called GLP-1 drugs, the Goldman duo wrote that, “under reasonable estimates for uptake and effectiveness,” they could boost GDP by 0.4%.
More broadly, the duo predicted “that a 10-year step forward in health progress in excess of current trends could raise the level of US GDP by 1%.”
There are numerous more possible repercussions, such as for government budgets. Improving the health of working-age people could result in increased fiscal income. However, if people live longer in retirement, Social Security benefits may increase. The long-term impacts on inflation are likewise questionable.
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