Goldman Sachs focuses on "wealthy elderly individuals," brain-computer interfaces, and gene drugs are the future of high-end self-paid medical care in China

With the rise of the "silver economy," the high-net-worth elderly population is expected to become a growth engine.

According to news from the Chasing Wind Trading Desk, Goldman Sachs recently released a research report stating that the medical expenditures of individuals over 50 years old with a net worth exceeding 3 million yuan will be a key driving force for the growth of the domestic high-end medical market.

Goldman Sachs believes that this group, although only accounting for 3% of the population over 50, contributes 5% of medical expenditures. By 2035, this proportion is expected to rise to 5% of the population share and 13% of expenditure contribution.

The report further predicts that the medical expenditure scale of this group is expected to grow from 221 billion yuan in 2024 to 963 billion yuan in 2035, with a compound annual growth rate of 14.3%, far exceeding the expenditure growth rates of the overall elderly population (5.3%) and all age groups (4.7%).

The report states that as the national medical insurance budget tightens, the role of out-of-pocket medical expenditures is becoming increasingly prominent, with the proportion of out-of-pocket payments expected to rise from 65% to 86% by 2035.

This means that companies providing high-end, elective medical services and products that are not subject to medical insurance reimbursement restrictions or centralized procurement will encounter structural growth opportunities. The report emphasizes that cutting-edge technologies, including brain-machine interfaces, gene drugs, and rehabilitation robot technologies, are expected to reshape the healthcare industry in the future.

High-Net-Worth Elderly Population: An Overlooked High-Growth Engine

The report points out that the market has recently focused too much on macro uncertainties while neglecting a key demographic trend—the population over 50 years old with a net worth exceeding 3 million.

Goldman Sachs states that this group, as the main beneficiary of China's economic growth over the past thirty years, has accumulated substantial wealth.

The report cites a survey by the central bank in 2019, indicating that the net assets of this group are approximately twice the average level of urban residents. Wealth management companies like Noah Wealth have over 60% of their clients aged between 50 and 60, further confirming the consumption power of this group.

Goldman Sachs expects the size of this group to grow from 15 million in 2024 to 29 million in 2035, with per capita annual medical expenditure increasing from 15,000 yuan to 34,000 yuan.

As the size of this group expands, the report predicts that the total medical health expenditure of this group will grow from 221 billion yuan in 2024 to 963 billion yuan in 2035. Although this group only accounts for 3% of the population over 50 in 2024, their medical expenditures already account for 5% of the total expenditures for that age group.

The report shows that by 2035, as this group's share of the population over 50 rises to 5%, their contribution to medical expenditures will leap to 13%, indicating a very high concentration of consumption.

Strong Rise of the Out-of-Pocket Market

For a long time, discussions among investors regarding China's medical industry have mainly focused on the price pressures brought by medical insurance cost control and centralized procurement. However, the report emphasizes that the out-of-pocket (OOP) market is playing an increasingly important role, especially in the fields of high-end drugs and medical consumables.

The report predicts that among this high-net-worth elderly population, the share of out-of-pocket payments will significantly increase from 65% in 2024 to 86% in 2035. This shift means that the traditional model relying on medical insurance reimbursement can no longer meet their needs Compared to the general elderly population, this group is more inclined to choose optional and high-end medical services that can significantly improve their quality of life. For example, in cataract surgery, they prefer multifocal intraocular lenses that can simultaneously address presbyopia; in vaccine choices, they are also more willing to pay out of pocket for the shingles vaccine.

The report shows that in terms of disease incidence, the prevalence of tooth loss, cataracts, diabetes, and other diseases has significantly increased among people over 50.

Therefore, the report clearly points out that early screening, preventive care (such as high-end vaccines), high-quality treatments (such as specialized drugs or consumables), and post-treatment care and rehabilitation services will be the main areas to capture the benefits of this wave of consumption upgrade.

Focus on companies with exposure to high-end out-of-pocket products

The report believes that companies with strong high-end and out-of-pocket product lines will benefit the most from the rise of "wealthy elderly people." The revenue growth of these companies' related businesses is expected to reach a compound annual growth rate of 13%-21%, far exceeding other business segments (4%-14%).

For these common diseases, Goldman Sachs has focused on six companies in the report: Aier Eye Hospital, ZHIFEI-BIOL, Haohai Biological Technology, TC Medical, Eyebright Medical, and Strides Pharma. These companies provide comprehensive medical services ranging from vaccine prevention to high-end treatment.

In addition, the report also specifically mentions the development prospects of emerging technologies such as brain-computer interfaces, gene drugs, and rehabilitation robots. Although these technologies are still in the early stages, they are expected to bring new growth opportunities to the high-end out-of-pocket medical market.

Brain-computer interface technology is divided into invasive and non-invasive types. Invasive brain-computer interfaces like Neuralink can obtain more detailed brain information and are suitable for medical needs such as spinal cord injuries and limb amputations. Goldman Sachs expects that as the number of implanted electrodes doubles every 18 months, the application scope of this technology will continue to expand.

In terms of gene medicine, with the development of CRISPR/Cas9 gene editing technology and the decrease in gene sequencing costs, personalized treatment will become possible. Goldman Sachs estimates that the total global market size for gene medicine will reach USD 4.8 trillion.

In the field of rehabilitation robots, Intuitive Surgical's da Vinci system performs outstandingly in minimally invasive surgery, while companies like Fourier provide motion function recovery solutions for stroke and spinal cord injury patients through AI and adaptive control technology.

Goldman Sachs believes that although these emerging technologies still require time from innovation to widespread application, their early application in the medical field has a high sense of urgency and marginal utility, providing an important opportunity for technology promotion