The private non-essential healthcare sector, like many other industries, saw an initial decline in demand when national lockdown was imposed in March earlier this year. As the lockdown eased in May and June, health and wellbeing fast became key areas of interest for the investment community with ‘non-essential private healthcare’ experiencing an atypical rise in demand. Some areas of the industry even boomed during lockdown, such as home-delivered meal kits and exercise equipment. But will industry growth continue?
In recent years, there has been an increasing demand for private dentistry, including cosmetic dentistry and facial aesthetics. The dental sector across Europe is highly fragmented and presents numerous investment opportunities in a range of subsectors. As NHS dentistry continues to narrow, with fewer dentists joining the profession each year, private dentistry is thriving.
A report by LaingBuisson found that the dentistry market was valued at £7.1 billion in 2017-2018. Private dentistry accounted for £3.6 billion, and NHS dentistry the remaining £3.5 billion. The reduction in NHS dentistry services available to individuals is partly down to tighter monitoring of exemptions and changes in the welfare benefits system. Online conversations around NHS dentistry are intrinsically negative. There are a few integral comments that are repeated online: the overall quality of treatment and the fact that the NHS does not financially cover all treatments. On Twitter, there has been a year-on-year increase of 248% around discussions of long waiting lists and appointment cancellations under NHS dentistry. While private dentistry also receives negative comments online, the sentiment is more positive when compared to NHS dentistry.
Changes to NHS dental services and the negative reactions from prospective users is allowing private dentistry to grow by attracting consumers that may have previously used the NHS.
The lockdown affected all dentistry services, both NHS and private, as millions of people stayed at home. When lockdown eased in late May, search data revealed that the demand for private dental services increased.
Online demand data reveals a growing demand for cosmetic dentistry. The term ‘cosmetic dentistry’ saw a significant peak in July 2020 with 8100 online searches, an all-time high. Specific procedures such as composite bonding (a procedure to repair damaged teeth using resin) is seeing search success. Data reveals that searches for the treatment have been doubling year-on-year since mid-2016. Even during lockdown, searches for the treatment continued to grow. July 2020 was a particularly good month for the search term, with 40,500 searches in one month.
Why are private dental practices growing in popularity? The answer lies partly in the migration of the experts, as the NHS dentistry is experiencing a recruitment crisis. Many dentists are opening their own private practices, citing difficult working conditions and a fall in dental standards in the NHS. This is not the sole reason for the growth in popularity of private dental care. Long waiting times for NHS dental appointments and treatments have pushed those who can afford it to migrate to private dental practices.
The cosmetic dentistry market is set to grow significantly over the next few years. Clearwater International found that cosmetic dentistry is the fastest-growing segment in the dental industry. In recent years, the average growth rate of the cosmetic dentistry market has been 5.2% per annum. This growth is expected to continue. Investment in private dentistry in the UK would be a wise move at this moment in time. Sector growth is expected to continue, and those who invest early are likely to reap the rewards.
The UK IVF market was valued at approximately £388 million in 2018 and is estimated to reach £700 million by 2026. More people in the UK are undergoing IVF as the procedure gradually becomes safer with higher rates of success. Sally Cheshire CBE, the Chair of the Human Fertilisation and Embryology Authority, explained that “we are seeing a gradual change in the reasons why people use fertility treatments, which were originally developed to help heterosexual couples with infertility problems.” Society’s attitude towards family creation, same-sex couples, single parents, and surrogate mothers continues to change. In 2017, treatments for female same-sex relationships rose by 12%, single women by 4%, and surrogates by 22%.
Changes to the NHS have influenced the rise in demand for private IVF services. Many regions in England have seen a decrease in the number of treatments funded by the NHS. This meant that approximately 2,000 fewer patients had their first round of treatment funded by the NHS in 2018 compared to 2017. Search data shows that UK searches for terms such as ‘private fertility clinic’ are receiving high volumes of searches that are continuing to grow. Since August 2016, searches have been steadily increasing, and 2020 has been a particularly good year regarding search demand.
Online conversations reveal a similar situation to NHS and private dentistry – people are moving away from NHS services. Conversations on Twitter, online forums and blogs show that the justifications for moving away from the NHS to private IVF services were varied. 11% had failed cycles, 25% were not eligible for NHS funded IVF, and 46% were unsatisfied by the long waiting times. Unfortunately, the issue of long waiting times will not have improved due to the coronavirus pandemic, which has delayed non-essential treatments.
As in vitro fertilisation becomes more acceptable in wider society for a growing proportion of people, and more people feel comfortable seeking help with their fertility, the sector will continue to grow. The rise in online searches and in treatments administered is not a passing trend. In terms of the investment potential in the sector, the numbers speak for themselves. The industry is expected to almost double its value by 2026. It will continue to grow and diversify over time, making it a potential investment opportunity.
Non-surgical cosmetic treatments are booming in the UK. Numerous cosmetic procedures have lost the stigma that used to be associated with them and are now viewed as acceptable in wider society. Wrinkle reduction, lip fillers, and other non-surgical treatments are no longer the preserve of the wealthy. Facial aesthetics has become part of many women’s beauty routines. Some repeatedly pay for procedures over long periods of time.
Search data demonstrates the rapid growth in demand for lip fillers. Lip filler has consistently received high search volumes, but in July 2019, figures jumped from between 27,000-33,100 searches per month to 40,000 plus. As expected, searches reduced temporarily in March 2020 due to the nationwide lockdown, but soon recovered. Like the figures for cosmetic dentistry, the term has recovered in terms of search volumes, and more. In July 2020, people in the UK searched ‘lip filler’ almost 50,000 times within 31 days. Clearly, the demand is growing rapidly, as will the market facial aesthetics market.
Individuals are taking steps to improve their health and appearance without receiving treatments through private healthcare. As consumers become increasingly health-conscious, they are more willing to spend money on non-essential items such as facial aesthetics and cosmetic dentistry. The figures show nothing but growth for the sector. It is estimated that non-surgical cosmetic treatments could grow to £3 billion by 2023. As a result, investment in the facial aesthetics market is wise at this moment in time. The sector is growing almost exponentially.
The sales value of over-the-counter vitamins and minerals in the UK was over £431.5 million in 2019, representing a 2.2 per cent increase compared to 2018. In recent years, the health of the UK population has become a collective concern. The official statistics on Obesity, Physical Activity and Diet found that 67% of men and 60% of women were overweight or obese. The coronavirus pandemic put health at the forefront of people’s minds. Researchers found that obesity and weakened immune systems increase the chances of hospitalisation with COVID-19. When media outlets reported that vitamin D supplementation could be a therapeutic agent for COVID-19, online data shows that searches for ‘vitamin D’ increased sharply. Post-COVID, a concern with health and wellness is here to stay.
In March 2020, when the national lockdown began, the term ‘multivitamin’ was searched 33,100 times in a month. It continued to grow by 11,000 when compared to the previous month. The growth of the vitamins and supplements market is expected to continue. Even before the coronavirus pandemic, sales were increasing year-on-year. These figures point towards generational change in terms of priorities; millennials and Generation Z are more health-conscious than the generations that came before them.
Numerous brands are benefitting from the increasing concern for health. Vitamin and supplement companies such as Healthspan have seen increased search demand over the last six months, with sharp increases in April as concern for health was at its height.
The same can be said for Biocare, a supplement supplier in the UK. Similar to Healthspan, search demand rose significantly in March/April when the UK went into lockdown. At this time, health concerns were at the forefront of people’s minds.
Data shows that the demand for products increased markedly in March 2020, when searches grew from 4,400 in February to 8,100 searches per month.
As the UK becomes increasingly health-conscious, recipe delivery services, especially those with a focus on health, have seen a boom in demand.
HelloFresh is a German start-up that has climbed its way to the top of the meal-kit delivery pyramid. The pandemic boosted demand for the company. However, even pre-coronavirus, HelloFresh was growing its customer base and sales consistently. The food delivery company expects full-year revenue growth between 40% and 55%. Even before the pandemic, the company was expected to see revenue growth of 22% to 27%. Search demand data demonstrates the spike in interest when the lockdown began in late March. Even as restrictions ease, HelloFresh is still proving popular, and sustained growth is expected to continue.
Since mid-2016, HelloFresh has been searched 135,000 times per month on average. When the lockdown began in March 2020, this figure ballooned to 368,000 searches in one month. In 2016, searches were relatively modest, with approximately 10,000-20,000 made per month. On average, search demand data for the company has increased ten-fold in only four years.
Competitors such as Simply Cook have also seen sharp rises in demand. The fast-growing brand secured 2.3m in equity funding in February 2020. Growth is expected to continue as revenues are expected to reach £15 million at the end of the year.
Compared to the beginning of 2019, ‘Simply Cook’ is being searched significantly more. On average, they are increasing month-on-month. Clearly, consumers in the UK are continuing to prioritise their health even after the lockdown, when health concerns were at their height. With companies such as Simply Cook and HelloFresh growing rapidly, recipe delivery services are ripe for investment.
Individuals are attempting to bolster their health using vitamins, supplements, and nutritious food, but they are also spending more time and money on fitness. Online searches for fitness equipment experienced a never before seen rise at the end of March as the lockdown began in the UK.
Millennials are dubbed as the ‘wellness generation’ who prioritise health and wellbeing. This is demonstrated by the significant growth in demand for vitamins, supplements, and healthy meal kit delivery services. For millennials, health and wellness is a daily pursuit, not a momentary thought. Older generations may have felt particularly concerned about their health when coronavirus cases were skyrocketing. However, millennials typically prioritise their health regardless of the current circumstances. They are committed to eating better than previous generations. They are also driving the vegetarian and vegan movements that have an emphasis on bodily health and wellbeing. The momentum continues to build with Generation Z. Those interested in investing in the nutritional wellbeing sphere have numerous innovative and fast-growing companies to choose from.
The coronavirus pandemic has made many in the UK more health-conscious, as those who have health conditions are more likely to get severely ill with the virus and risk hospitalisation. Search demand data demonstrates that health concerns have certainly contributed to the sharp increase in supplement, meal-kit, and fitness equipment demand and sales.
Pre-coronavirus, non-essential private healthcare services such as private dentistry, in-vitro fertilisation, and facial aesthetics experienced a rise in demand as health and wellbeing became more important to individuals. Growth is predicted to continue in many sectors as the concern for health and wellbeing is here to stay, even post-pandemic. COVID-19 brought the dangers of ill health to the forefront of people’s minds, but a commitment to improving health will continue beyond the pandemic.
British society is experiencing a fundamental shift when it comes to health and wellbeing. The increase in searches for private healthcare and other health-related products is not a passing trend. The shift is spearheaded by millennials and Generation Z. These individuals place more emphasis on their health than older generations. While private healthcare services and wellbeing products are ideal investment opportunities, investors should also consider the peripherals to health and wellbeing if they are to utilise the sector for continued financial gain.
Finally, it is important to note that the collective emphasis on health and wellbeing is beneficial to everyone, not just investors. By investing in private healthcare and health products, investors can help innovative companies to further the emphasis on healthy living in a way that benefits society.
Read our range of articles and reports to find out more about digital due diligence and which industries are worth investing in at this time.