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Speaker 1: Now the issue of aging populations is becoming more and

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Speaker 1: more of a focus for investors because get this, I

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Speaker 1: mean this is massive.

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Speaker 2: Right.

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Speaker 1: Globally the number of people aged over sixty is going

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Speaker 1: to double and those over eighty is going to triple

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Speaker 1: just in the next twenty six years, and of course

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Speaker 1: the implications for our eye sight is massive. Debora Lamby

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Speaker 1: from mil Fanact Management is with us.

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Speaker 2: Now, Hey, Deborah evening, how are you?

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Speaker 1: I'm well? Thank you. Now, vision care is becoming more critical, right,

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Speaker 1: not just for individuals but investors as well. What's going

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Speaker 1: on here?

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Speaker 2: So right now, globally around one and three people are

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Speaker 2: myopical short sighted, but by twenty fifty that number will

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Speaker 2: jump to nearly one and two, so every second person

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Speaker 2: will be either myopic or short sighted. And there's a

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Speaker 2: couple of factors behind this. So firstly, aging populations, which

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Speaker 2: you've already mentioned. As we get older, our eyes naturally

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Speaker 2: change and people are more likely to need corrective lenses,

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Speaker 2: whether that's glasses or contact lenses. And then secondly, increasing

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Speaker 2: screen time. So have you ever wondered how much our

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Speaker 2: daily screen habits are picked our eye sight. We are

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Speaker 2: now nearly a decade on from the launch of the

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Speaker 2: iPhone four, which is widely thought to have mean the

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Speaker 2: mass driver of mass smartphone adoption, with the whole world

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Speaker 2: now moving towards increased screen time, and so it's become

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Speaker 2: pretty clear that prolonged screen time is not good for

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Speaker 2: your vision over the long term.

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Speaker 1: So if you're looking at it from an investment perspective,

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Speaker 1: in this particular part of the market, who are the

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Speaker 1: main players?

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Speaker 2: Yeah, So the global contact lens market, it's around sixteen

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Speaker 2: billion dollars in size, and there's three big players that

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Speaker 2: control ninety percent of that market. So there's a Swiss

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Speaker 2: company called Alcon, along with US companies Johnson and Johnson,

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Speaker 2: which you probably know from products like band aids, Johnson

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Speaker 2: baby products, and Listerines. And then there's autho US company

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Speaker 2: called Cooper Vision. And historically the market has grown around

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Speaker 2: five percent a year, but over the past few years,

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Speaker 2: with those factors that we've talked about, growth has been

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Speaker 2: accelerating to just under ten percent a year. Now.

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Speaker 1: I've been hearing that what's going on is that there

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Speaker 1: are people who previously might have used like monthly contact

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Speaker 1: lenses now using daily contact lenses. I imagine that's that's

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Speaker 1: having an impact on the market, is it.

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Speaker 2: That's a great point. We are witnessing a major shift

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Speaker 2: there as well. So people are moving from, as you've said,

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Speaker 2: monthly or biweekly lenses, which lasts for two to four weeks,

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Speaker 2: to daily disposable lenses, which are worn for just once

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Speaker 2: a day. And daily lenses they offer they're more convenient

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Speaker 2: and comfortable, lower risk of infections, and also thanks to

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Speaker 2: manufacturing advancements, they're also becoming more affordable. So this shift

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Speaker 2: is led to a dramatic increase and the volume of

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Speaker 2: lenses being used worldwide. So if you're using monthly lenses,

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Speaker 2: you need twenty four lenses a year, so one per

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Speaker 2: I per month. But with the daily lenses, you need

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Speaker 2: around seven hundred lenses per year, so that's nearly thirty

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Speaker 2: times more.

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Speaker 1: Yeah, I mean that's massive. That's a huge jump in demand, right,

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Speaker 1: So can companies actually keep up with this increase?

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Speaker 2: So in short, not yet. Demand for these products has

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Speaker 2: been stronger than what the companies can actually produce, and

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Speaker 2: all of the main players have been investing a lot

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Speaker 2: over the past few years to build out capacity, but

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Speaker 2: they are still selling lenses faster than they can make them,

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Speaker 2: so it takes time for new factory lines to come online,

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Speaker 2: and dynamic is expected to continue for a number of years.

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Speaker 2: And one of the benefits for companies is that operating

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Speaker 2: in a simply constrained environment has allowed them to maintain

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Speaker 2: strong prices for their lenses, which has been good for

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Speaker 2: industry growth.

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Speaker 1: So how have the shares of these companies performed then, Yeah.

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Speaker 2: These companies have been pretty solid performers, especially given they

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Speaker 2: operate in a more defensive part of the market. So

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Speaker 2: so far just this year, our con shares are up

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Speaker 2: around twenty five percent, Cooper shares are up around fifteen percent,

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Speaker 2: shares in Johnson and Johnson A up around seven percent,

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Speaker 2: but that's more diversified, with Visioncare only making up around

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Speaker 2: five percent of their total revenue. So given the aging populations,

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Speaker 2: increasing screen time, and the shift to daily contact lenses,

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Speaker 2: the contact lens market is really in a period of

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Speaker 2: transformation and it's the space that invests are becoming interestingly

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Speaker 2: increasingly interested.

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Speaker 1: In fascinating stuff. Debraah, thanks for chatting us through. There's

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Speaker 1: Debra Lambia of Milford Asset Management.

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