How Healthcare Investment Offers Real Opportunities

Investing in healthcare is becoming increasingly popular to an ageing population. Healthcare investment comes in many forms and is made up of several different industries. From pharmaceuticals and medical devices to health insurers and hospitals, each individual area has different dynamics, and each are affected by many differing variables. Healthcare investment requires a multifaceted approach to understand the underlying drivers. Since the arrival of Covid-19, healthcare investment had increasingly attracted more attention. Situated at the forefront of technological innovation, healthcare provides investors with exciting growth opportunities throughout the market cycle. Covid-19 has thrown a new focus on the industry, reviving interest, and boosting activity within several sub-sectors.

Trends in the Healthcare Sector

When deciding on a healthcare company in which to invest, keep the following prevalent trends in mind. Changes to or continuations of these trends can have implications for a variety of areas within the healthcare sector.

Positive trends include:

  • The aging population and the baby boomers.
  • People living longer with chronic disease.
  • Obesity and diabetes epidemics.
  • Technological advances.
  • The global reach of disease.
  • Personalised medicine.

Proper liability is also an important measure to review. These stocks are generally more stable and less susceptible to surprises compared to other related stocks, such as drug stocks.

The Opportunities

Healthcare investment allows investors to profit from investments in both the sector as well as its industries. Some of the main opportunities available include:

  • Healthcare spending currently accounts for 10.5% of global GDP with the industry expected to grow at an annual rate of 5% per year. This is forecast to eventually reach a global market value of $15 trillion by 2028. Mergers & acquisitions remain a key theme driving expansion in the industry with 2019 representing the highest year on record for deal making.
  • Good Health and Wellbeing forms one of the 17 UN Sustainable Development Goals (SDGs) and as such has led to a lot of emphasis being made toward increasing life expectancy and reducing some of the common killers. However, a lot of further work and investment is needed as less than half the global population is covered by essential health services and almost 100 million people a year fall into extreme poverty due to health expenses.
  • The healthcare sector is genuinely diverse, offering a multitude of opportunities for investors. There are companies involved in a broad array of fields such as medical devices, pharmaceuticals, life sciences and biotechnology. The fundamentals for the sector look to be pretty robust with good sales and earnings strength compared to other sectors.
  • The healthcare market has a constant demand, people rely on healthcare internationally, there it will never run out.

Investing in healthcare stocks can provide generous returns. The healthcare sector is vast, and there are many large and small companies to choose from in various industries. To help ease the burden, there are investment vehicles like ETFs and healthcare mutual funds in which you can invest; they can reduce the volatility of investing in individual stocks by diversifying holdings.