27 May 2015

Erin Xie

 

 

 

 

In 2014, all four sub-sectors in the MSCI World Healthcare Index posted gains, led by biotechnology as positive clinical developments or the anticipation thereof boosted these shares. The second largest contributor was the healthcare providers & services sub-sector as select companies, like healthcare facilities, benefited from the continued implementation of the Affordable Healthcare Act in the U.S., while several healthcare equipment companies, part of medical devices & supplies sub-sector, reported solid financial results driven by the development of new, innovative products.

So far this year, once again, gains in relative performance have been generated across all four healthcare sub-sectors with healthcare providers & services sub-sector overtaking biotechnology as the lead.

Generally, Healthcare remains less economically sensitive relative to most other sectors. At the same time, it possesses strong growth characteristics, thanks to the improving innovation cycle. As a result, the sector is experiencing numerous breakthroughs, enhancing the long term growth outlook and delivering a multi-year driver of returns.

While the healthcare sector is not as cheap as it was, the positive secular tailwinds of innovation, aging demographics, benign healthcare policy environment provide support for current valuations.

 

 

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