Sustainability
Health sovereignty: investing in resilience
Health is critically and strategically important for socioeconomic stability and development. But geopolitical risks are driving countries towards greater resilience in key areas – like health – and shifting away from undue reliance on other parties. This shift is creating a new set of long-term investment opportunities.
Key takeaways
- The role of healthcare is evolving as geopolitics, demographics and systemic risks reshape national resilience.
- A more strategic and coordinated approach to health systems can reduce vulnerabilities and strengthen socio‑economic stability.
- Sovereignty has traditionally referred to a country’s ability to act independently in key areas. Today, this concept is evolving into a broader, financially material theme centred on autonomy and resilience.
- We see significant implications for productivity, crisis resilience and long‑term investment outcomes.
Sustainability as a driver of resilience in critical sectors has gained investment momentum and is increasingly reflected in investment portfolios.1
Healthcare systems are as essential to core national infrastructure as energy, defence and digital networks, underpinning economic continuity, productivity and crisis response – the OECD explicitly frames these as foundational to national security and economic resilience.2 As such, we expect the scope of European sovereignty to expand to include the management of health systems and risks.
Exhibit 1: Eight factors impacting European sovereignty
Source: Allianz Global Investors, Sustainability Research 2025
While health emergencies can reflect the positive potential of global co-ordination, they can also spiral into economic and political crises. The current fragile geopolitical backdrop is already raising concerns over country’s individual ability to ensure supplies of pharmaceuticals, vaccines and medical products.
At the same time the US withdrawal from the World Health Organization (WHO)3 has weakened both the collective response capacity and shared international responsibility for health. WHO plays a critical role in coordinating outbreak detection, response and datasharing. National-only data collection and analysis will likely hinder early warnings about unusual disease development, gene sequencing of new pathogens, and overviews of currently circulating influenza viruses. It is also financially inefficient – for the US to rebuild global disease risk monitoring will cost USD 2 billion annually, three time the country’s contribution to WHO.4Shocks and disruption
Increasing geopolitical competition, pandemics, supply-chain shocks and structural workforce shortages demonstrate the dependency of health systems on foreign manufacturing, data systems, technologies, and labour flows. In the past these disruptions occurred either sporadically or even simultaneously within the system and are likely to intensify over time.
Stable healthcare systems protect populations and reduce systemic disruptions to economies. However, recent incidents such as Covid-19 have exposed these vulnerabilities, turning shocks into more frequent systemic risks – for example, shortages of essential medicines.
Material factors
Exhibit 2: Factors affecting resilient healthcare
Source: Allianz Global Investors, Sustainability Research 2026
Below we look at the influence of each factor in Exhibit 2 on the resilience of healthcare systems:
- Geo-fragmentation: Health systems are no longer peripheral but can become strategic targets, alongside energy and other critical infrastructure, through direct attacks on facilities, disruptions to medical supply chains and pressures on healthcare workers.5 At the same time, higher defence spending across the EU is driving a longer term shift in fiscal priorities, placing sustained pressure on public finances and potentially limiting future investment in health and social systems.6
- Supply chain dependence: Europe remains highly dependent on a limited number of global suppliers for key medicines and active ingredients, reflecting years of production delocalisation driven by efficiency gains. While this strategy reduced costs, it has also increased exposure to supply disruptions. Strengthening domestic manufacturing capacity can enhance medicine security and support an autonomous and resilient health system.7
- Reliance on scientific innovations: Countries with few domestic R&D and manufacturing capabilities for medicines, vaccines and diagnostics remain highly dependent on imports and are slower to respond to national health needs. At the same time, sustaining scientific talent is essential, as today’s skills base underpins future innovation capacity and long term healthcare resilience.
- Demographics: As the demographic shifts toward a higher proportion of older individuals, the demand for long-term care, specialised geriatric services, and treatment for chronic and complex diseases increases. Ageing populations’ increase in long-term medical conditions and rising multimorbidity8 represent a constraint to health sovereignty. This is primarily a result of increased demand for hospital and nursing home services, workforce pressures and shortages, and increased reliance on medical resources.9
- Shortage of care labour: This trend is being driven by retirement in high-income countries combined with difficult working conditions which has limited available, qualified replacements. A global healthcare worker shortage of at least 10 million is expected by 2030.10 Strengthening and retaining domestic health workforces is critical not only for care delivery, but also for broader economic resilience, given the spillover benefits of a healthier, more productive population.
- Cyberattacks: Healthcare services are increasingly at risk of cyberattacks, particularly from ransomware, with patient privacy a significant concern.11 These attacks often target the outdated infrastructure of public health providers, as well as connected medical devices, leading to disrupted operations, exposure of sensitive patient data, significant financial losses, and interrupting business continuity.12
- Climate events/natural disasters: Climate-related natural disasters are increasingly destroying critical healthcare infrastructure and directly injuring people, creating long-term health crises. These events, including hurricanes, floods, wildfires, and heatwaves, not only cause immediate interruption but also disrupt supply chains and power, forcing hospital evacuations and suspending essential care.13
- Pandemics: Pandemics are large-scale outbreaks of infectious disease that can greatly increase morbidity and mortality over a wide geographic area. While Covid 19 accelerated investment in national public health agencies and emergency response capacity, future pandemic risks remain. Effective surveillance and early warning systems continue to be essential to protect populations and safeguard socio economic stability.14 Influenza, avian flu or other zoonotic viruses could become again a system threat in the near future.15
These factors do not operate in isolation. In practice, they manifest through a range of recurring shocks that expose system vulnerabilities, including:
- Medicine shortages and delayed patient care.
- Cyberattacks disrupting digital health infrastructure,16 eg, the WannaCry incident on the UK’s National Health Service.
- Climate disasters.
- Armed conflicts threatening physical healthcare assets.
Exhibit 3: European market share decreased forsmall molecules
Small molecules – chemical compounds used in most generic medicines – are a critical component of pharmaceutical supply chains. Roughly 60% of small molecule active pharmaceutical ingredients (APIs) for generic medicines are outsourced to Asia, mainly China and India.
Merchant market, small molecules, €bn, %, 2014-2023, World
Small molecules merchant market (2023): c.€60bn
Source: medicines for europe
Investing in health autonomy
To strengthen health system resilience and autonomy especially, we see four key areas of investment opportunity:
1. Improving critical infrastructure: Greater investment in healthcare infrastructure will be needed to adapt to higher heat and physical risks. Cooling plans, often developed by governments and municipalities, will require investment in hospitals to implement new infrastructure like improved air conditioning, while installing alternative electricity sources like solar panels can mitigate energy-related physical risks.17
2. Autonomous development of medicine: The European Commission is overhauling the EU framework governing biotech and pharmaceutical innovation. Strengthening domestic capacity can secure essential medicines and enable rapid scaling in times of need. At the same time, the EU aims to accelerate innovation, reduce barriers and support investment in advanced and priority therapies, reinforcing Europe’s strategic autonomy in healthcare.18
3. Governance and control of health data and AI systems: Control over health data – particularly within AI driven and cloud based systems is becoming a strategic requirement, as large volumes of sensitive data are currently processed outside the EU. Strengthening resilient, data centric infrastructure, while enabling access to large scale datasets for research, can reduce reliance on external providers. AI enabled drug discovery and health technologies have the potential to strengthen Europe’s R&D autonomy and accelerate responses to future health emergencies.
4. Skilled and stable healthcare workforce: A high level of care is important for patients, nursing home residents and resilience of the entire health system. Maintaining sufficient staffing levels, improving working conditions and ensuring rapid surge of capacity in emergencies are essential to system resilience. At the same time, intelligent automation – combining AI, digital tools and robotics – can ease workforce pressures and expand access to care, strengthening the system’s ability to respond under stress.19 Exhibit 4 is an extract of our framework to assess these issues across the healthcare sector, to support portfolio management decisions.
Exhibit 4: Assessing human capital management in healthcare
Source: Allianz Global Investors, Sustainability Research 2026
The role of investors
Healthcare is one of the largest global markets, valued at approximately USD 13.7 trillion in 2025, and is expected to grow at around 7% CAGR through the mid-2030s.20 Healthcare sovereignty represents a strategic growth market being comprised of systems that are critical economic assets. In our view, there is a shift away from cost-cutting towards resilience and productivity – which will require greater investment. Many OECD countries spend over 10% of GDP on healthcare, with Germany and US at 12.3% and 17.2% – figures that dwarf defence spending.21
As governments prioritise resilience and autonomy, capital allocation in healthcare is shifting towards strengthening domestic systems – such as pharmaceutical production, health infrastructure and data capabilities – and reducing external dependencies.
This transition is expanding the opportunity set for investors – but also making outcomes more uneven. In this environment, identifying the companies best positioned to support and benefit from more resilient health systems will be key.
Isabelle de Gavoty,
Head of European Equities SRI:
“Clients increasingly seek investment solutions capable of supporting these long-term structural transformations. Investing in healthcare – from digital heath technologies to pharmaceutical manufacturing and human capital – plays a central role in strengthening state resilience by reducing strategic dependencies and contributing to long-term and social stability. Healthcare stands as a critical pillar—both a fundamental societal need and a strategic investment priority—where innovation, resilience, and access will be decisive in shaping a more secure, independent, and sustainable future.”
2. Business at OECD Health Forum, Health as an Economic Imperative, March 2025
3. WHO, Statement on notification of withdrawal of the United States, January 2026
4. The Washington Post, U.S. considers building pricey alternative to World Health Organization, February 2026
5. www.insecurityinsight.org The Effects on Healthcare of the Use of Explosive Weapons, July 2024
6. New Economics Foundation, European defence spending soars, but climate and care are still ‘unaffordable’?, June 2025 and European
Commission, The economic impact of higher defence spending – Economy and Finance, May 2025
7. Medicines for Europe, Hearing on Overreliance on Imports of Active Pharmaceutical Ingredients, January 2025
8. AllianzGI, Healthcare: how to live better, July 2024
9. Investopedia, Global Economic Challenges of an Aging Population, February 2026
10. McKinsey, Closing the gap on the healthcare workforce shortage, May 2025
11. WHO, Europe launches guide to strengthen cybersecurity in digital health, March 2025
12. AHA Center for Health Innovation, The importance of cybersecurity in protecting patient safety, 2026
13. National Library of Medicine, The impact of natural disasters on healthcare and surgical services in low- and middle-income countries, July 2023
14. UNEP, Six years after COVID-19’s global alarm: Is the world better prepared for the next pandemic?, 2026
15. UNEP One Health, 2026 16. NHS England, NHS England business continuity management toolkit case study: WannaCry attack, April 2023
17. Allianz Global Investors, Healthcare: how to live better, July 2024
18. European Commission, Commission welcomes political agreement on major reform of EU pharmaceutical rules, December 2025
19. World Economic Forum, How automation gives healthcare workers time for patients, January 2025
20. Global Growth Insights, Healthcare Market Growth, Trends & Forecast Report 2035, April 2026
21. Allianz Global Investors, Access to healthcare – more important than ever, January 2023 and European Parliament, Health expenditure in relation to GDP: Health at a Glance 2025 and European Parliament, Defence: how the EU is boosting its security, June 2019
