International | Jul 23 2025
Surging Antimicrobial resistance is expected to cost US$3bn to US$4bn over the next decade and lower GDP of low-and middle-income countries, Federated Hermes warns.
Surging Antimicrobial Resistance hitting the long-term value of healthcare, pharmaceutical and food-related companies
Expected to cost US$3bn to US$4bn over the next decade and lower GDP of low-and middle-income countries – Federated Hermes warns.
By Michael Yamoah, Director Engagement at EOS at Federated Hermes
Antimicrobial resistance (AMR) is often framed as a public health crisis. But for investors, it represents a systemic, underappreciated risk that can quietly erode value across sectors and portfolios.
As bacteria and viruses evolve to resist treatment, the effectiveness of antibiotics diminishes. This increases the risk of medical procedures, leading to prolonged hospital stays, higher healthcare costs, and a loss of economic productivity.
This isn’t a hypothesis thought, it is happening now, and the financial consequences are already affecting the long-term value of healthcare, pharmaceutical and food-related companies.
A complex, global risk
The drivers of AMR are many. Overuse and misuse of antibiotics in both human medicine and agriculture are accelerating resistance.
In many developed markets, antibiotics are still prescribed for viral infections where they offer no benefit. In agriculture, they’re used not just to treat illness, but to promote growth and prevent disease in intensive farming systems.
Meanwhile, the pipeline for new antibiotics is drying up, as the health economics simply don’t add up. Antibiotics have development costs, see limited sales volumes, and uncertain pricing power have made antibiotics commercially unattractive.
In 2024, only three of the 50 new drugs approved by the FDA were antibiotics.
The impact on long-term value
The implications for investors are significant. In healthcare, resistant infections are driving up treatment costs, increasing hospital stays, and straining insurance systems. For healthcare providers and REITs, this translates into higher operational costs and margin pressure.
In the food and agriculture sectors, regulatory shifts and changing consumer preferences are reshaping business models. The EU’s Farm to Fork Strategy, for example, aims to halve antibiotic sales for animal use by 2030. Producers who are reliant on routine antibiotic use face rising costs, longer production times, and potential reputational damage.
Resistant infections already increase treatment costs by 30-53% per patient. And AMR is projected to contribute to global financial losses of US$3bn to US$4bn over the next decade, with GDP impacts in low- and middle-income countries potentially exceeding -5% by 2050.
Un-priced systemic risk
Despite its scale, AMR remains largely invisible in most valuation models. It’s a classic un-priced risk which undermines the foundations of healthcare and food systems, and by extension, the broader economy.
As resistance grows, so too does the potential for disruption across global supply chains, particularly in sectors where margins are already tight and resilience is limited.
Conclusion
For investors, the key is to understand where AMR intersects with long-term value.
-Pharmaceutical companies face a paradox. Developing new antibiotics is essential, but stewardship practices limit their commercial viability. Investors should scrutinise R&D pipelines, access strategies, and risk exposure to resistance trends.
-The financial burden of AMR is rising for healthcare providers and insurers. Monitoring cost structures and diagnostic capabilities can offer insight into operational resilience.
-Antibiotic stewardship, supply chain transparency, and animal welfare practices are becoming material differentiators for food retailers. Companies that fail to adapt may face regulatory penalties and consumer backlash.
-Water utilities, insurers, and even real estate could face indirect exposure as AMR reshapes public health infrastructure and economic productivity.
Bottom line
AMR is not just a health issue but a material systemic risk that demands attention from the investment community. It challenges assumptions about resilience, sustainability, and long-term value creation.
Investors have a unique vantage point. By engaging companies, encouraging transparency, and supporting advocacy for timely and effective public policy, they can help drive the systemic change needed to address this global threat.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On