Why Might Be Time to Invest in the Healthcare Industry in 2020

The notion of investing in healthcare is not commonplace in the UK, primarily because the vast majority of citizens use the NHS and private healthcare is only utilised by a relatively small number of people.

Conversely, private healthcare represents huge business in the States and other countries across the globe, with IT sector of the healthcare sector in North America alone set to peak at a staggering $239.9 billion by the end of 2025.

However, this market is notably volatile and has taken something of a battering of late, undermining the reputation of the private healthcare sector as being a relative safe haven for investors. But is this a market that investors should consider now, and if so, why is this the case?

Appraising the Issues Facing Healthcare Investment in the States

In the last decade or so, there’s no doubt that private healthcare in the U.S. has taken a sustained and significant beating, thanks to the cumulative impact of Congressional scrutiny, price pressures and high-profile court cases.

Then there’s the uncertainty surrounding the Affordable Care Act and the failure of the Donald Trump administration to put forward a viable alternative, which continues to undermine the value of the healthcare sector and cast doubt over its long-term future.

Interestingly, the coronavirus outbreak has also raised serious discussions concerning the nature of healthcare in the U.S., with socialist Democrat candidate Bernie Sanders suggesting that the global pandemic had laid bare “the incredible weakness and dysfunctionality” of healthcare in the States.

This has only served to cast further doubt over the future of healthcare in North America, particularly from an investment perspective.

The reason for this is simple; as single-payer healthcare has been mooted and would be universally available to citizens and funded through a single public system like the NHS, negating the need for the widespread provision of private healthcare.

So, Why is Now the Time to Invest in Healthcare?

Despite these challenges, there’s more than enough evidence to suggest that healthcare represents a solid investment opportunity, especially from the perspective of those with a long-term outlook.

This is particularly true in the current marketplace, as premium stocks may well be undervalued due to the wider economic climate and the direct impact of Covid-19.

Over time, the health sector has also proved itself to be a reliable and relatively safe asset class, and indeed healthcare remains the second-best performing market in the States since the 1970s.

During this time, the private healthcare sector has showcased consistent growth, overcoming significant hurdles and managing to thrive in a number of diverse Republican and Democrat governments.

Beyond this, it’s also important to note that the U.S. alone is planning to invest heavily in healthcare in the next financial year, with the total spend expected to peak at $4 trillion during this period.

This can inspire considerable industry growth and improved sentiment, which you in turn can leverage by targeting a relevant equity fund that’s managed by a financial market expert.

UK investors may also be interested to see whether the NHS is indeed on the table during future trade talks with the U.S., which are likely to follow in the next 18 months now that the UK has left the EU.

While this would be damaging to the NHS if elements of the service are privatised or sold off (or drugs become more expensive when sourced from the States), it would be good news for private healthcare in North America and would boost this lucrative market even further.