Finding market leaders in the NEXT economy

Mark Baribeau, global head of equity at Jennison Associates, examine the six major 'NEXT' economy themes.

On-demand consumption

Until Apple launched the iPhone in 2007, mobile phones primarily offered users a convenient way to make calls away from home. Since then, consumers have used their phones to download movies, build song libraries, hail car rides, and connect with friends.

Today, there are roughly five billion mobile phone users, accounting for 66% global penetration. In the US, adults average almost six hours a day on digital media, more than half that time on a mobile device.

Global consumer

Large, young populations with rising disposable incomes, particularly in emerging markets, are creating significant demand for premium products.

This demographic shops primarily online and is largely reached through social media.

Companies generating consumer excitement and developing e-commerce platforms with superior distribution will benefit most.

One company capitalizing on the global consumer and on-demand themes is MercadoLibre, the leading e-commerce platform in Latin America with 267 million users in 2018.

Based in Argentina, MercadoLibre also operates the region's largest online payment network, a credit line, and a real estate listing business. Through these interconnected businesses, the company has developed diverse revenue streams and strong customer loyalty.

Enterprise technologies

A key strategy for enhancing the customer experience is collecting and analyzing digital user data. Just 90% of the world's data was generated in the past two years, but only 0.5% of it has been analysed.

This disconnect has created opportunities for companies to interpret and store this data, adapt business models, and quickly deliver customer solutions.

Cloud leaders such as Amazon.com and Microsoft are providing efficient access to high computing power.

Digital payments

Walk into any coffee shop and notice how many customers pay with a credit card or phone instead of cash, even if the bill is only a dollar or two.

Digital payments are rising alongside on-demand consumption, a shift offering tremendous investment opportunities. Low barriers to entry, convenience, and high security are key drivers of this trend.

In China, which likely will become the world's first cashless society, mobile payment volume surpassed $16trn in 2017, dwarfing the US by a factor of 50.

Adyen, a leading European-based payment processor with a €159bn volume in 2018, embodies the digital payment and enterprise technologies themes.

Profitable since 2011, the company counts among its 3,500 customers heavyweights such as Uber and Facebook, and is expanding to emerging markets.

Mobility and autonomy

The cars we drive and how we get from point A to point B are changing rapidly. While electric cars seemed like a remote possibility just a decade ago, they are now competing fiercely with combustion engine vehicles.

Meanwhile, ride-on-demand and ride-sharing companies like Uber and Lyft are threatening the viability of taxi cabs.

A new generation of robotics that combines deep intelligence with virtual reality tools is fueling advancements in autonomous driving technologies.

Ride-on-demand and autonomous driving are taking mobility to another level, creating a new ecosystem that may one day eliminate the need for people to own or operate their own cars.

Health tech and therapies

Robotics is making a mark in the health care sector as well. Intuitive Surgical, a pioneer in robotic surgery, has developed a system that combines software, hardware, and optics, allowing doctors to perform robotically aided surgery from a remote console.

This system is gaining traction for general surgeries, such as hernias, in the US and increased acceptance in Europe and Asia.

The importance of technology in the health care sector goes beyond robotics. Advances in scientific knowledge and technology platforms are fueling an unprecedented flow of innovative new biopharmaceuticals and diagnostic tools that address serious unmet medical needs.

Within the biopharmaceuticals sphere, two areas are particularly promising: immuno-oncology, a therapeutic approach that leverages a patient's own immune system to identify and kill cancer cells; and gene therapy, the transplantation of genetically modified genes into cells in place of missing or defective ones to correct genetic disorders.

In the diagnostics sector, next-generation gene sequencing is disrupting biological and medical research and treatment development.