Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Pharmaceutical Industry
Transcript
- Lucas: You know, for decades, the pharmaceutical industry has pretty much treated children as a default market. Pediatric dosing, child-friendly formulations, vaccines—that was a huge chunk of R&D. But the demographic math is shifting, and so is the industry. Luna: Because there are fewer kids and a lot more older people. That changes the incentive structure pretty dramatically. Lucas: Exactly. Let me give you the numbers. Globally, the number of children under five is projected to decline by about 10 percent by 2050. Meanwhile, the population over 65 is set to grow by 60 percent. So pharma companies are following the money, and the money is in age-related diseases. Luna: It's not just about volume, though. Older patients take more drugs. They have multiple chronic conditions. So the revenue per patient is much higher. Lucas: Right. A child might need a course of antibiotics once a year. An older adult with type 2 diabetes, hypertension, and osteoarthritis is on daily medication for life. That's a recurring revenue stream. So we're seeing a massive reallocation of R&D dollars away from pediatric conditions toward things like Alzheimer's, heart failure, and metabolic disease. Luna: And a perfect example is the GLP-1 receptor agonist class. Drugs like Ozempic and Mounjaro were originally developed for diabetes. But now they're being studied for Alzheimer's, for heart failure, for non-alcoholic fatty liver disease. The potential market just exploded. Lucas: And it's not just the GLP-1s. Look at the entire oncology space. Cancer is overwhelmingly a disease of aging. The average age at diagnosis is around 66. So as the population ages, cancer drug development becomes even more central to pharma strategy. The same goes for dementia. There's a reason the FDA approved lecanemab and donanemab in recent years—they're chasing a massive unmet need. Luna: But what about the kids? Are there drugs that we're not developing because the market isn't big enough? Lucas: That's the concern. And it's already happening. For example, there are very few new antibiotics in development for pediatric infections, because the return on investment is low. The FDA has tried to incentivize pediatric studies through the Best Pharmaceuticals for Children Act, but it's an uphill battle when the adult market is so much larger. Luna: So we might end up with a situation where older adults have access to cutting-edge therapies for conditions that barely existed a generation ago, while children with rare diseases or infectious diseases are left with older treatments. Lucas: That's the trajectory. And it raises some uncomfortable ethical questions. But the economics are clear. The pharmaceutical industry is a business, and it's responding to demographic signals. Luna: Speaking of responding to signals—this whole conversation has been a lot about incentives. And honestly, the reason we can have these kinds of detailed, ad-free discussions is because of listeners who support the show. If walking through the economy with us has made something click, and you feel like today's episode was worth a coffee, there's a link for that. Lucas: Yeah, it's buy me a coffee dot com slash fexingo. No pressure, just a way to keep this independent. And we really appreciate it. Luna: And we're back to the numbers. Lucas, you mentioned the shift in R&D—are there any specific disease areas where the aging population is creating entirely new categories of drugs? Lucas: Absolutely. One of the most interesting is geroscience—the idea of targeting the biological mechanisms of aging itself. Instead of treating individual diseases, you treat aging as the root cause. Companies like Unity Biotechnology and Alkahest are developing drugs that clear senescent cells or restore youthful protein levels. Luna: And that's a huge bet. If you can delay aging, you delay all the diseases that come with it. But it's also incredibly risky—regulators are used to approving drugs for specific indications, not for 'aging'. Lucas: Right. The FDA doesn't yet have a framework for approving an anti-aging drug. So these companies are initially targeting specific age-related diseases—like osteoarthritis or macular degeneration—while collecting data on broader aging outcomes. It's a workaround. Luna: And it's not just small biotechs. Big pharma is in on it too. Novartis has studied metformin for aging. AbbVie has partnerships in the senolytic space. The potential market—if you could even call it that—is essentially everyone over 60. Lucas: Exactly. And that brings us back to the birth rate angle. With fewer young people entering the workforce, societies are going to need older adults to stay healthy and productive longer. So there's a public health imperative as well as a commercial one. Luna: Which means governments might start subsidizing anti-aging research, or at least fast-tracking regulatory pathways. Japan is already doing this—they have a national strategy for extending healthy lifespan. Lucas: And Japan is a bellwether. Their birth rate is one of the lowest in the world, and their population is the oldest. So what happens in Japan today often happens elsewhere tomorrow. If you look at their pharmaceutical market, it's dominated by drugs for hypertension, diabetes, and dementia. Pediatric drugs are a shrinking segment. Luna: So for investors, the signal is clear: look for companies with strong pipelines in age-related diseases. But also be aware of the ethical dimension. Are we comfortable with a world where drug development is so skewed toward the old? Lucas: And that's not just an ethical question—it's an economic one. If children's health is neglected, you end up with a less healthy future workforce. There's a long-term cost to short-term profit maximization. Luna: But in the meantime, the silver dividend for pharma is real. We're seeing record R&D spending on Alzheimer's, on obesity, on cardiovascular disease. The demographic tailwinds are strong. Lucas: I think the key takeaway is that pharmaceutical R&D is a lagging indicator of demographic change. The birth rate started falling decades ago, but the drug pipeline is only now shifting to reflect that. And it's going to keep shifting. By 2030, I'd expect most major pharma companies to have a dedicated geroscience unit. Luna: And maybe that's a good thing. Better drugs for older adults means longer, healthier lives. But we have to make sure we don't leave the youngest behind. Lucas: Agreed. And that's a policy question as much as a market one. But for now, the market is speaking, and it's saying: follow the gray hairs.