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Anna Johansson
Anna Johansson
Articles (39) 

Health Care Investment Trends for 2017

It remains popular in spite of administration's efforts to repeal law

March 28, 2017

Despite uncertainty about the path of health care with President Donald Trump’s objective of repealing the Affordable Care Act, health care remains a popular investment. It continues to grow as the population lives longer and modern medicine advances. This year may be your opportunity to profit on this lucrative sector with some popular investment trends.

Investors love the health care sector because it’s low risk and offers the chance to make higher profits. The demand for health care in every form is consistent and will never disappear. Similarly, there are always groundbreaking advancements being explored, and when a certain prospect proves successful, it offers high returns for everyone involved.

But just because the health care sector is typically a good investment doesn’t mean it’s easy to get into. “Health care investing requires a multifaceted approach to understand the underlying drivers,” says an article from Investopedia.

It goes on to explain that a variety of trends like baby boomers, longer lifespans, technological advancements, personalized medicine, obesity and diabetes epidemics, and other trends can influence the success or failure of any investment. Changes in these trends can grow or reduce the ROI for any investor.

There are always ebbs and flows in the health care market so it’s hard to pinpoint an exact company or field that will be most profitable. That being said, based on certain industry trends and a careful market watch, investors will likely find a lucrative venture in any of the following categories:

Pharmaceutical companies

“Within the health care sector, the cream of the crop in terms of margins and cash flow are pharmaceutical companies,” says Sean Williams, seasoned investor and contributor for The Motley Fool. “Often sporting diverse product portfolios and pipelines, brand-name drug developers can sometimes maintain gross margins in excess of 70%, 80%, and in rare cases even 90%. The end result tends to be generous shareholder returns in the form of share buybacks and healthy dividends.”

It can be complicated to sift through the various pipelines that go into a great pharmaceutical investment, but the dividends are high. The price of drugs and medication are rising rapidly, and the demand is always up for these life-saving components. Successful drugs have incredible ROI.

You could also invest in drug research, which is a little riskier, but puts you up for a better return if it winds up successful. If an organization develops a life-changing medication for diabetics, for example, you would benefit most by being among the first to invest in this medication.

Health insurance corporations

Another highly profitable venture with high demand and excellent returns is health insurance stocks. Due to the rising costs of both health care premiums and pharmaceutical companies, investors receive a large portion of those profits.

What’s more, the presidential election and the discussions of repealing Obamacare in favor of another unchartered plan have stocks surging. The day after the election, the Nasdaq Biotechnology Index rose a whopping 9%.

“The Trump win is a tremendous boost to the sector on a couple of parameters: less regulation and more free-market principles,” Michael Gregory, head of health care credit and equity for Highland Capital Management told Fortune.com.

At this present moment, while there’s still talk of a freer market and uncertainty in the healthcare market, investing in health insurance stocks could be huge for an investor’s portfolio.

Telemedicine

Telemedicine ranks high on the list of today’s health investment trends. Telemedicine platforms have attracted some big-time investments as they’ve grown in popularity over the last few years. It was only a matter of time before basic medical needs could be handled over the phone or video chat, and investors have taken advantage of the prospect for growth here.

Big-time investors, in particular, have taken advantage of the prospects in telemedicine. Virgin Group’s Richard Branson, for example, recently put money toward Doctor on Demand, a Bay-area telecommuting practice. His interest in this organization stems from the growing popularity of the platform and the hot market performance over the last couple of years.

“If you want to know where a market is headed, it’s a smart idea to follow the money,” says Andrea Smith of Chiron Health, a growing telemedicine practice. “When it comes to health care, the amount of investment in telemedicine platforms leaves little room for doubt that video visits and remote patient monitoring solutions are the future. Whether the investment is in technology, like Chiron Health, that enables providers to offer remote visits as an option, or platforms that support an on-line only service model, the number and value of transactions is remarkable.”

Investing in health care is all about pointing to the future. There are high returns on investment and potential for growth in this particular sector that’s in high demand.

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About the author:

Anna Johansson
Anna is a freelance writer, researcher, and business consultant. A columnist for Entrepreneur.com, HuffingtonPost.com and more, Anna specializes in entrepreneurship, technology, and social media trends. Follow her on Twitter and LinkedIn.

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