Stocks: Healthcare Continues to Outperform Every Other Industry


Although it may seem as though the healthcare market has been fluctuating drastically with changing legislation and physician shortages, CNBC reported that the healthcare sector actually rose 162 percent, according to the S&P 500 health-care sector, since 2010. In addition, with year to date returns of 8.8 percent, healthcare is outperforming every other sector.

Why has it risen so fast?

The rise of patient enrollment in health care systems has meant more people receiving healthcare treatment, and more money flowing into the healthcare system.

Also, there has been a rise in biotech drugs that focus on cutting edge therapies for the treatment of specific conditions. This means that companies can charge more money per treatment, perform better, and still bring in large profits. For example, Gilead Science in 2014 released Sovaldi, a hepatitis C drug that pulled in $10 billion and is expected to keep pulling in revenue.

More and more larger and well established pharmaceutical companies are also catching up with the times and paying more attention to their stockholders, while rebranding themselves too.

Are there risks?

There are always risks. Some risks include the production of generic medications which can effect large pharmaceutical sales of brand name drugs.

There is also risk associated with small biotech companies that focus on two or three drugs in their pipeline as a main source of revenue. However, as we saw with Gilead Science and Sovaldi, there is the potential to make huge profits in these sectors.

Putting it all together

The healthcare market is not only stable, but growing. It will be important to pay attention to new drugs coming out, as these will have large impacts on the healthcare economy. Investors should also make note of the increase in access to healthcare services, leading to more money flowing into the market.

Summary by David Eisenberg

To read more from David click here

To read more from CNBC click here

David Eisenberg is currently a medical student at The Commonwealth Medical College in Scranton, PA, and a contributor to Medical Groups. David believes that it is critically important for physicians to not only be well rounded clinically, but also financially. In an ever changing healthcare system, David hopes to help physicians not only understand how to successfully navigate the dynamic healthcare landscape, but also how to take a leadership role in continuing to develop the medical profession that so many have diligently dedicated their life’s work to. In addition to contributing to Medical Groups, David works with, as well as helps to run an app for pre-med students that he co-founded, PreMD Tracker.


Follow David on twitter: @deisen3