2023-11-25 18:26:08
How investors can make money from the boom in the healthcare market
The healthcare sector is one of the fastest growing sectors worldwide due to the aging population. You can easily cover it with investment companies and funds.
We are getting older: digitalization in the healthcare market can lead to stronger growth. A pensioner in a video call with her doctor.
Foto: Getty Images
I hold BB Biotech shares. For the purpose of diversification, I am also considering buying HBM in a depot. Would this be an opportunity to invest more broadly in the sector for the long term? D.H.
By holding shares in BB Biotech, you are investing in the growth market of biotechnology. BB Biotech, which is traded on the Swiss stock exchange, is one of the largest investors in the biotech sector globally and focuses on listed companies that concentrate on the development and marketing of novel drugs with added value for the healthcare system.
HBM Healthcare Investments is also listed on the Swiss SIX stock exchange, but covers a different sector: as an investment company, it holds a globally diversified portfolio of private and listed companies from the healthcare sector. The company invests primarily in mature private companies with an attractive valuation and a compelling business model including product pipeline, technology and management.
In terms of total assets, the portfolio currently consists of 44 percent listed companies, 35 percent private companies, 9 percent funds and 12 percent liquid assets and other assets. The attractive dividend policy that has been in place for years speaks in favor of the share. However, the price development is negative in the current market environment – as is the business development.
Leaving negative marks has adverse currency effects. Rising interest rates and inflation also have a negative impact. Due to rising interest rates, many investors have become more cautious about investing in growth companies, including those in the healthcare and biotechnology sectors. This negative market environment is unlikely to change quickly, so I do not expect a quick recovery for HBM shares.
Digitalization can advance the healthcare market faster
However, I share your belief that the healthcare market is one of the fastest growing sectors globally, with demographics with an increasing proportion of older people, particularly in Western countries, but also in China, further stimulating demand for healthcare services and products. Seen in this way, the HBM shares would be a diversification for you compared to the shares of BB Biotech.
At the same time, you also carry an increased risk with the HBM stocks, as both companies are strongly positioned in sectors and growth companies that are prone to fluctuations. Both stocks are only suitable for a broadly diversified portfolio.
However, before you invest in the shares of HBM Healthcare Investments, I would also look at Bellevue Medtech & Services (CH), which is managed by the Bellevue Bank, from which you already hold BB Biotech shares. At Bellevue Medtech & Services (CH), capital is invested worldwide in shares of companies in the medical technology and healthcare services sector. When selecting stocks, the company focuses on companies with a high medical benefit and degree of innovation as well as on companies that bring savings potential for the healthcare system.
What is interesting about Bellevue Medtech & Services’ approach is the fact that it invests in the healthcare sector without investing in drug manufacturers. You can also do the latter through individual investments in, for example, Roche and Novartis. Instead, the focus of Bellevue Medtech & Services is on profitable, liquid mid- and large-cap companies that already have a more mature product portfolio, as well as on small caps that have a technologically innovative product range.
The majority of the fund’s investments are in the USA and therefore in the world’s most important healthcare market. Here too, the dollar’s declining trend against the Swiss franc as well as rising interest rates and inflation are having a negative impact. In the medium term, however, digitalization in the healthcare market could lead to stronger growth and more profitability, especially for US medical technology companies, which would put you well positioned for this at Bellevue Medtech & Services.
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