Health is the main thing. How can you earn money on it?
The past years, which have passed under the sign of a pandemic, have shown not only how important health issues are for a person, but also that you can make good money on it.
Against the backdrop of the fall of most industries, medical and pharmaceutical companies look more than confident. This further enhances their investment attractiveness.
Meanwhile, today the sector is also interesting for its diversity. In addition to the high-profile medical centers and pharmaceuticals, there is a huge number of different types of companies in the industry that can generate good income.
Pharmaceutical companies
Investments in pharmaceutical companies require in-depth analysis.
Large enterprises (also called Big Pharma) are characterized by lower investment risk compared to younger ones. However, this always has a downside - the less risk, the lower the income. And vice versa.
To bring new products to market, pharmaceutical companies spend most of their resources on research and development.
The results of clinical trials usually directly affect the value of shares.
Positive results promise growth. But unfortunately, there are also negative test results, the consequences of which for companies can be significant.
Medical services
The backbone of the healthcare system is hospitals and clinics. When their shares are available for investment, they have good potential. At the same time, health care providers are exposed to huge regulatory risks and influence from regulators.
The amount of dividends is also affected by the recurring need to make, as a rule, costly upgrades and refurbishments to improve conditions and increase the potential number of patients.
Health insurance
An important player in the healthcare sector is health insurance companies. The insurance industry is also very dependent on the changes taking place in the regulatory framework. However, their stocks tend to be less volatile than clinic stocks.
Medical equipment
The range of products on the market is impressive, from consumer devices such as thermometers, blood pressure monitors, to sophisticated professional equipment for healthcare facilities.
These devices are always in demand. Therefore, the companies producing them are stable, but as a rule one should not expect rapid growth. True, there are always exceptions, which the pandemic has perfectly demonstrated when the demand for masks, respirators and other protective equipment has skyrocketed.
As in the pharmaceutical industry, medical device manufacturers spend a lot on research and development. And also the sector is represented by both established large players and young startups with great growth potential.
Software Development
The healthcare software development segment is represented by both companies integrated into the process of producing medical goods and equipment, as well as software manufacturers for the end user, whether they are home users or medical institutions.
This sector promises more growth potential than the hardware industry itself.
Prospects
Most experts agree that, in general, the industry of medicine and healthcare is becoming one of the most promising and therefore attractive for investment. Due to the social significance of the sphere, medical expenses are growing every year in almost all countries.
Today, health care stocks are ranked third after technology and finance in the S&P500 index.
Interest in the area enhances the possibility of diversifying the investment portfolio. The sector is represented by both established companies promising stable income and ambitious start-ups.