The economy is going through a late cycle. This means economic growth is slowing, as inflation is rising and stock prices are becoming expensive. Under such conditions, one of the best sectors to invest in is healthcare. No matter the state of the economy, medicine and healthcare will always be in demand because it is far less tied to economic growth than any other sector.
Four areas that represent great market opportunity in the healthcare sector are cardiovascular diseases (CVDs), diabetes, cancer treatments, and medical devices.
CVDs are the number one cause of global deaths, closely followed by cancer. Not surprisingly, the cardiovascular market is estimated to grow to $146.4 billion by 2022 and the global cancer therapy market to grow to around $220 billion in 2024.
By 2045, around 629 million adults are expected to have diabetes. Diabetes caused an expenditure of at least $727 billion in 2017.
Because of the introduction of advanced technologies, such as artificial intelligence and robotics, the global medical devices market is expected to grow by $119.98 billion in 2018-2022.
The healthcare industry includes a wide range of companies. The following are some companies performing well in the healthcare areas that show growth:
Johnson & Johnson (J&J), the largest healthcare company in the world, operates in at least 60 countries. It has been increasing its dividend for 56 consecutive years.
J&J’s consumer segment markets a wide variety of household brands, including Band-Aid, Benadryl, Neosporin, and Tylenol. Its pharmaceutical segment has many popular multiple-approved prescription medicines, such as immunology drugs and cancer drugs.
J&J’s medical devices segment provides orthopedic applications, and interventional solutions for surgical, eye health, cardiovascular, and neurovascular problems. It has also entered the robotic surgical systems market by acquiring Auris Health.
Eli Lilly has business operations in over 125 countries. The increase in sales of its new drugs and the successful spin-off of its animal health unit Elanco through a $1.5 billion IPO gave it a recent boost.
The company expects 45 percent of pharmaceutical sales in 2019 from the new drugs it launched in the recent past for treating diabetes, migraine and cancer. It also hopes to divest its residual stocks in Elanco by the close of 2019.
Merck has interests in oncology, diabetes, CVDs, vaccines, and infectious diseases, such as HIV and Hepatitis C. The sale of its key cancer drug Keytruda registered 80 percent growth, making Merck one of the best-performing pharma stocks of 2018.
Similarly, some other drugs, such as Bridion and Gardasil, brought in good revenues. Merck also has a robust pipeline of drugs, which are sure to buoy its position.
Pfizer recently hit a 10-year high price, driven by increasing sales of its pneumococcal vaccine Prevnar 13 and anticoagulant Eliquis. Its biosimilar product Neupogen and drug Xtandi were approved for treating non-metastatic prostate cancer by the U.S. Food and Drug Administration (FDA).
Pfizer’s early-state breast cancer medicine Herceptin and drug for ulcerative colitis Xeljanz were approved in the EU. The company is hoping for FDA approval for Tafamidis, a treatment for progressive heart damage.
Originally a spin-off from Abbott Laboratories, AbbVie is a leading drug research company. Its interest spans across areas, such as oncology, neuroscience, and immunology. Its flagship autoimmune drug Humira is the world number one in annual sales. Many of its pipeline drugs are expected to hit the markets by 2020.
Intuitive Surgical manufactures da Vinci robotic surgical systems, using which over one million surgical procedures were performed in 2018. Nearly 5,000 da Vinci systems are in use worldwide. Intuitive makes over 70 percent of its total proceeds from recurring sources, particularly instrument replacements that come from the number of procedures performed.
Healthcare stocks face several risks, such as governmental regulatory changes and competition. However, they can provide strong long-term returns, if investors research them well and use sound strategies.