Investing In Healthcare Stocks: Sector Overview, Types, & Future

Investing In Healthcare Stocks: Sector Overview, Types, & Future

By Megha

As per the Global Industry Classification Standard, 11 sectors in the stock market influence the financial world. The healthcare sector is one of them. It is one of the most profitable investment sectors, and for some apparent reasons. Everyone needs to call for medical care & related services at some or other points in their lives. This sector offers an exceptional amount of diversity and options to the investors, making it eligible for the adage “invest in what you know.”

If you are someone more inclined towards the medical domain, you can invest your hard-earned money in the healthcare sector and gain a positive outcome in the form of higher healthcare stock prices. But like any other investment sector, healthcare has its downsides and risks as well. It makes out that you must equip yourself with full-fledged knowledge in the realm of medicine & healthcare stocks. A rigorous study and research of the industry would help you make intelligent & strategic decisions. 


Read on and learn everything that you need to know about the healthcare sector. All the information given in this article will help you forecast and assess the market to make an informed investment decision and obtain financially viable healthcare stock prices. 


Table Of Contents:


1. Introduction To Healthcare Stock Market

2. Types Of Industries In the Healthcare Sector

3. How Is the Healthcare Sector Performing?

4. Why Invest In Healthcare Stocks?

5. Future Prospect Of Healthcare Sector In The U.S.


Introduction To Healthcare Stock Market

The healthcare industry includes enterprises offering medical services, manufacturing medical supplies or medicines, providing health insurance, or otherwise facilitating healthcare delivery. It is a large sector that accounts for almost one-fifth of the overall GDP in the US. Supported with an intense research and development system, the healthcare sector in the U.S. contributes to an overwhelming share and plays a pivotal role in the performance of stock markets.


Types Of Industries In the Healthcare Sector

When an investor puts in their money in the healthcare sector, they are investing in various industries. While most people think of healthcare as just one segment, it indeed goes far beyond and includes manufacturing, research, production, and other medical related-service providing companies. Every component of the healthcare sector operates independently and contributes to the rising healthcare stock prices. Here is a broad classification of different industries in this sector that might interest you in investing. 


- Pharmaceuticals

- Drugs

- Biotechnology

- Payer

- Medical Equipment

- Managed Healthcare

- Healthcare Facilities


How Is The Healthcare Sector Performing?

The COVID-19 pandemic places an intense strain on the global healthcare sector. It has brought about a massive change in the entire ecosystem of healthcare, and constant innovation has become the need for the hour. Despite all of this, healthcare is still one of the major sectors in the financial market. Coupled with the damage caused by the pandemic on the economy, the attention on this sector increased further, and it has offered its shareholders a higher healthcare stock prices return. 

In 2019, the estimated size of the global healthcare market was worth the U.S. dollar 175 billion. The following year, it increased to $216 billion and later became $268 billion in 2021. This steady growth in the healthcare sector presents various opportunities for investors with higher and higher healthcare stock prices by each passing year. Even though the development of the healthcare sector is quite impressive, all you need is the right stock to invest in, and it will indeed prove to be nifty.


Why Invest In Healthcare Stocks Right Now?

Are you looking for the answer - why invest in the healthcare sector? Well, the question should be, why not invest in this industry? Indeed, it is one of the stock market sectors that is difficult to avoid. 


Healthcare is our primary need. Regardless of the growth or fall in the economy, the demand for healthcare will remain stagnant. It is, therefore, correct to say that this sector is a great investment opportunity. Also, being a well-established sector, investing money in it will provide a cushion of safety and excellent healthcare stock prices in the future. With this, there are several other reasons why an investor should invest in healthcare stocks. Some of the reasons are:


- The growing number of people over 65 years indicates the higher demand for medical care.

- Enormous spending on medical facilities to treat the illness expanded the sector. 

- Advancement in technology promotes the healthcare system for several diseases.

- The outbreak of the coronavirus pandemic shifted the government’s attention from other sectors to the healthcare industry.

- The introduction of customized healthcare services opened up several opportunities.

- Progression in the R&D department helped the healthcare sector grow in terms of medical solutions and healthcare stock prices.


Future Prospect Of Healthcare Sector In The U.S.

Even with the current healthcare scenario amidst coronavirus pandemic, this is a promising sector for all the investors. The experts have claimed excellent growth prospects in the healthcare sector in the coming years by conducting various studies. 


A Statista report says that the profit of the healthcare sector will rise by approximately five percent (5%) per year till the end of 2024. Every industry segment will show a significant increase in profit by 2024, with Payer and Pharma being the fastest during the span. The yield of the payer’s segment is projected to increase from $86.2bn in 2019 to $116.6bn in 2024. However, the profits in the pharma division will rise from $125.9bn in 2019 to $169.9bn in 2024. Without an iota of doubt, this is massive growth, and investors can expect to enjoy excellent healthcare stock prices in the foreseeable future.


Given the increased demand for healthcare services, it is the perfect time for all the keen investors to step in, take calculated risks, & be a part of the healthcare market. It opens up ample bankable opportunities every day, reinforcing the faith to provide exciting returns and fitting healthcare stock prices.