Investment opportunities in the healthcare sector
You can expect to benefit from a higher life expectancy. The standards you set for your own health are high because health is wellbeing. Investing in the healthcare sector means sharing and disseminating quality of life. Investing in the healthcare sector also means more effective screening for disease, more patient-friendly and efficient treatments, less need for long-term nursing, shorter lengths of hospital stay and lower healthcare bills as a result.
It creates opportunities for highly attractive returns – a genuine investment in your future.
Structural growth
Higher life expectancy, an increasing incidence and prevalence of chronic disease, changing lifestyles and the rise of medical esthetics are associated with continuously increasing demand for healthcare services. Alongside the largely non-cyclical demand from developed markets, healthcare markets in emerging market countries – notably China – are growing and opening up new sales potential.
Demographic trends help to stimulate demand:
Source: Bellevue Asset Management
Innovation
Many diseases such as hepatitis C and selected cancers still have no cure or lack effective treatment options, calling for novel alternative drugs and treatment approaches. The industry is highly innovation-based, driven by genome and proteome research, advancement of basic technologies for diagnostic imaging systems, and breakthroughs in molecular diagnostics. Innovative drugs with more effective mechanisms of action, new screening methods and minimally invasive intervention technologies help make treatment more focused, efficient and patient-friendly.
Healthcare reforms
Current and upcoming healthcare reform drives are demanding higher efficiency in the healthcare system. One tenth of world expenditure goes into the healthcare sector, half of which is publicly funded. National budget constraints are already forcing countries to improve efficiency. Modern technologies that enable more effective, recovery-accelerating and hence cost-cutting treatments are called for. Innovation-driven, cutting-edge companies pledging to raise efficiency and lower healthcare bills will see their stock market value climb even higher as a result.
Investing at a profit
Leading healthcare companies have a sound track record of double-digit growth rates and profitable earnings. Our estimates see innovative companies in biotechnology, medical technology and healthcare infrastructure continuing to achieve 10% to 20% growth in the coming years, while traditional pharmaceutical companies are likely to face patent expiries and increasing pressure on margins. Investment in innovative healthcare companies pays off in the long term for stock investors as well.
For instance, investors putting their money in a diversified portfolio of biotech stocks benefited over the last 15 years from an annualized performance in excess of 11% compared to 5% delivered by a global equity portfolio.
A good time to start investing
Biotech companies have full pipelines these days. Experts expect breakthroughs in pioneering new treatments and therapeutic areas in the coming years. Molecular methods help screen for and detect disease in the early stages, resulting in accelerated recovery and lower overall costs. Increasing prosperity in newly industrializing countries is creating vast new sales potential in largely untapped markets. Leading innovation-driven companies stand to benefit from the prospects for profitable growth in the coming years – and these high-quality stocks are incredibly good value on stock markets at the moment.
Investing with the experts
Detecting the most attractive investment gems on offer in the world today in relation to effective and novel treatments requires a profound understanding of the various aspects of medicine, biochemistry and molecular biology. Analysis of financial data alone is not enough to deliver the desired investment results. Continuously rethinking and refining existing perceptions, closing knowledge gaps and advancing across new horizons is the major challenge involved. It calls for global networking of investment experts with top scientists, patent lawyers and practitioners in every field. And then there's the fact that small to mid-sized companies with plenty of market potential rarely feature on the radar of Wall Street analysts. All these factors fuel the need for an active, benchmark-independent investment approach underpinned by solid fundamental research.