Healthcare stocks refer to shares issued by publicly traded companies that provide healthcare products or services. Everyone needs healthcare at some point in their lives. When a good or service becomes a necessity for the entire population, investors face enormous market opportunities.
Currently, global healthcare expenditures stand at approximately $10 trillion, with more than half—about $5.3 trillion—occurring in the United States. Since the healthcare industry is growing significantly faster than the overall economy, related expenditure figures will almost certainly rise substantially by the end of this decade. How can investors profit from this growth trend? Here are some candidates worth watching.
Vertex Pharmaceuticals (VRTX) is a standout in the biotechnology sector. The company is primarily dedicated to developing drugs that treat the underlying causes of cystic fibrosis (CF), a rare genetic disease that damages the lungs and other organs. In addition, Vertex has expanded beyond CF, launching the gene-editing therapy Casgevy (a one-time treatment for sickle cell disease and transfusion-dependent beta-thalassemia) as well as the acute pain therapy Journavx.
Intuitive Surgical (ISRG) is a quintessential representative of both medical device stocks and surgical instrument stocks. Its Da Vinci robotic surgical system has been used in over 20.4 million procedures since its introduction in 1999. The company also sells the Ion robotic system for minimally invasive peripheral lung biopsies. Over the long term, the company has significant growth opportunities as an aging population drives increased demand for the types of surgical procedures in which Da Vinci is commonly used.
TransMedics Group (TMDX) develops and sells Organ Care Systems (OCS) for transporting lungs, hearts, and livers for transplantation. The OCS mimics human functions in multiple ways, keeping donor organs viable before transplantation. TransMedics has also created the National OCS Program (NOP), which provides end-to-end services related to organ transplantation, including air transportation. The company has major growth opportunities in disrupting the organ transplant market, is expanding internationally, and is developing an OCS version suitable for kidneys—with annual kidney transplant procedures outnumbering lung, heart, and liver transplants combined.
The three companies mentioned above focus respectively on biopharmaceuticals, surgical robotics, and organ transport, and all benefit from rigid demand driven by demographic changes and technological advancements. Vertex leverages its foundation in cystic fibrosis drugs and expands its boundaries with novel therapies such as gene editing; Intuitive Surgical relies on the extensive installed base of the Da Vinci system and aging-related surgical demand to maintain long-term growth momentum; TransMedics, centered on its Organ Care System, enters the underserved transplant market through full-chain services and international expansion. When paying attention to these individual stocks, investors should align them with their own risk tolerance and remain mindful of potential variables such as industry regulation, technological iteration, and market competition.
