Overview of the healthcare sector and ways to invest in it.

Investing in the healthcare sector

The Covid-19 pandemic brought healthcare to the forefront. Companies within this sector developed treatments and vaccines for the virus with unprecedented speed, implemented digital healthcare solutions, adjusted supply chains to produce personal protective equipment (PPE) and much more.

As emphasised amid the Covid-19 health crisis, the healthcare sector is dynamic and constantly innovating, creating new investment opportunities. Have you thought about investing in healthcare? Then, keep reading to find out more about this sector and ways to invest in it.

Industries within the healthcare sector

The healthcare sector is broad and spreads across several industries. In fact, it is the second-largest sector within the S&P 500 after information technology. There are two main industries within the healthcare sector, which both have three sub-industries:

  • Healthcare Equipment & Services
    • Healthcare equipment & supplies—companies that manufacture medical equipment and supplies, including everything from bandages to stethoscopes to MRI machines (i.e., Envista Holdings, Nipro, Sonova)
    • Healthcare providers & services—companies that provide healthcare services, owners and operators of healthcare facilities, insurers and distributors and wholesalers of healthcare products (i.e., Walgreens Boots Alliance, McKesson Corporation, Cardinal Health)
    • Healthcare technology—companies that provide information technology tools and services to healthcare providers (i.e., Allscripts, Cerner Corporation, Computer Programs and Systems, Inc.)
  • Pharmaceuticals, Biotechnology & Life Sciences
    • Biotechnology—companies that research, develop and produce products derived from living organisms (i.e., Novo Nordisk, Galapagos, Regeneron Pharmaceuticals)
    • Pharmaceuticals—companies that research, develop and produce products made primarily from artificial sources (i.e., Johnson & Johnson, Pfizer, Roche)
    • Life sciences tools & services—companies that provide analytical tools, clinical testing services and contract research services to enable drug discovery and development (i.e., Bionano Genomics, Charles River Laboratories, Illumina)

Most valuable life science/pharmaceutical companies

The majority of the world’s most valuable life science/pharmaceutical companies are either US or European companies:

The majority of the world’s most valuable life science/pharmaceutical companies are either US or European companies.

How to invest in healthcare

Healthcare offers many investment opportunities being so broad. Some of the more common ways to invest in healthcare include:

  • Stocks—One way to invest in healthcare is through stocks within the sector. Since there are many sub-industries, there are plenty of options.
  • ETFs—Healthcare exchange-traded funds (ETFs) make it easy to gain exposure to multiple companies within the sector in a single product. For example, the SPDR MSCI World Healthcare UCITS ETF tracks the performance of stocks within the healthcare sector, including companies such as Johnson & Johnson, Roche and Thermo Fisher Scientific.
  • REITs—You can also invest in healthcare real estate investment trusts (REITs), for example, Welltower and Omega Healthcare Investors. REITs in this field typically invest in property types such as hospitals, senior living complexes and medical offices.

Most traded healthcare stocks

The most-traded healthcare stocks through our platform during the period 01.01.21-21.05.21 were:

The most traded healthcare stocks through the DEGIRO platform are Bionano Genomics, Ocugen and Galapagos.

Investing with DEGIRO

We want to make investing accessible to everyone by offering incredibly low fees. For details, please visit our Fees page.

On top of low fees, we offer you access to one of the largest universes of products and exchanges. This can help you influence your risk by building a well-diversified portfolio and spreading your investments over different types, regions and sectors. For an overview of the products and exchanges we offer, please visit our Markets page.

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The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks. You can lose (a part of) your deposit. We advise you to only invest in financial products that match your knowledge and experience.

Sources: Financial Times, Bloomberg, MSCI, Investopedia, Corporate Finance Institute, KPMG, Motley Fool


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