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This FTSE 100 stock can help you profit from an ageing population

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It’s official – we’re all getting older! But before you go ahead and accuse me of stating the obvious, let me explain what I REALLY mean. You may have heard on many occasions the old saying about the only certainty in life being death (and taxes), but it seems that on average we’re all living longer, and the population on the whole is getting older, much older.

Motability scooters

This is particularly true in developed countries where a combination of better healthcare and fewer children is leading to an older population overall. Here in the UK, it’s estimated that around one in six people are currently over the age of 65, but that’s about to change. Forecasters say this figure is likely to be around one in four by 2050 – just imagine a quarter of the UK population armed with Motability scooters and Zimmer frames.

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But seriously, how can we as investors profit from having such foresight? Well, let’s get the obvious one out of the way first, that is pharmaceuticals. Companies like GlaxoSmithKline and AstraZeneca are almost certain to benefit, not just here in the UK, but also in other developed nations, and in particular countries like Japan and Germany, were the general population trend is skewing older at an even faster rate than our own.

$4.7bn in sales

Diseases such as cancer and diabetes are sadly on the rise, and the increase in demand for a whole host of treatments should also benefit some of the smaller, more specialised drug companies. Perhaps less obvious to investors is the increase in demand for products and services supplied by firms such as Smith & Nephew (LSE: SN), best known as a world leader in joint replacement systems for knees, hips and shoulders.

But the FTSE 100 medical technology giant contributes a whole lot more than just orthopaedic reconstruction, with other facets of the business providing advanced wound management, sports medicine and trauma implant systems. With annual sales reaching almost $4.7bn last year, and a presence in more than 100 countries, Smith & Nephew is easily the largest medical technology business listed on the London Stock Exchange, and in my view still the best.

Greying population

And it’s not just ageing populations in developed markets that should help to swell demand for the company’s products in the future. Healthcare systems and hospital infrastructure in the developing world is improving at a considerable pace which, allied with improving incomes, should also help the group’s sales over the longer term.

Given the business’s defensive qualities and track record of steady growth, it’s perhaps not surprising that the share price has followed an upward trajectory since the company went public at the start of the millennium. However, a recent sell-off means the shares are available at a significant discount to last year’s all-time highs of 1,431p (trading at 1,264p late Friday afternoon). I believe anyone looking to profit from a greying population should seriously consider Smith & Nephew right now.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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