# Are the US healthcare sector’s frailties treatable? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-03-17 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: US Healthcare Sector Outlook: Opportunities Amidst Political Meta Description: Discover expert analysis on the US healthcare sector's performance post-presidential election, with a focus on structural trends and exciting technological URL: https://financedigest.com/are-the-us-healthcare-sectors-frailties-treatablehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/business-people-shaking-han-1-1736844071750-compressed.jpg) By **JaisalPastakia,** Investment Manager at Heartwood Investment Management The US healthcare sector has been a notable underperformer since the presidential election, saddled by issues around competitive drug pricing and the Affordable Care Act (ACA). Stocks have been under further selling pressure this week as US Congressional discussions begin to repeal and replace the ACA. This political overhang is likely to stay in the short term, but we also think that some of the [market’s concerns](https://www.financedigest.com/rising-concerns-towards-safety-of-child-are-expected-to-drive-demand-for-baby-car-seat-market.html "Rising Concerns Towards Safety Of Child Are Expected To Drive Demand For Baby Car Seat Market") are overdone. Ultimately, our view is that a Republican president and a Republican-controlled Congress will probably provide a more corporate friendly environment – via [tax cuts](https://www.financedigest.com/poland-to-launch-fresh-tax-cuts-in-anti-inflation-drive.html "Poland to launch fresh tax cuts in anti-inflation drive") and a desire to reduce the regulatory burden – than perhaps if Hillary Clinton had been elected. Furthermore, the healthcare lobby in Washington is a [powerful force](https://www.financedigest.com/russia-seizes-ukraine-nuclear-power-plant-as-forces-lay-siege-to-cities.html "Russia seizes Ukraine nuclear power plant as forces lay siege to cities"), being the largest spender by some margin versus other industries. Its financial clout suggests that any legislative change would be difficult to implement if it were seen to be a negative for the [industry](https://www.financedigest.com/the-four-benefits-of-digital-transformation-in-the-finance-industry.html "The Four Benefits of Digital Transformation in the Finance Industry"). Longer term, the healthcare sector remains underpinned by the following [structural trends:](https://www.financedigest.com/solar-panel-mounting-structures-market-expectations-growth-trends-highlighted-until-2031.html "Solar Panel Mounting Structures Market Expectations & Growth Trends Highlighted Until 2031") - **Ageing demographics, rising life expectancy and growing consumerism in healthcare.** According to the United Nations, the proportion of the population [aged 60 and over is expected](https://www.financedigest.com/what-is-expected-of-leaders-in-the-age-of-automation.html "What is expected of leaders in the age of automation?") to nearly double between now and 2050. Rising life expectancy, a phenomenon being experienced in both developed and [developing nations](https://www.financedigest.com/four-reasons-why-smes-in-developing-nations-should-embrace-a-cashless-society.html "Four reasons why SMEs in developing nations should embrace a cashless society"), implies increasing levels of healthcare spending to treat chronic illnesses, such as heart disease, cancer and diabetes. Global spending on health as a proportion of GDP was 9.9% in 2014, according to the World Health Organisation. Some of the largest spending increases have been seen in [emerging market economies](https://www.financedigest.com/global-fuel-injector-cleaner-market-emerging-economies-expected-to-influence-growth-until-2031.html "Global Fuel Injector Cleaner Market: Emerging Economies Expected to Influence Growth until 2031") as their middle class populations expand, particularly in South East Asia and the Middle East. - **New discoveries through [technological advancements](https://www.financedigest.com/the-diabetic-socks-market-to-prove-its-servility-to-technological-advancements.html "The Diabetic Socks Market To Prove Its Servility To Technological Advancements") and innovation:**: The biotech revolution represents one of the most exciting areas of technical innovation. Since the mapping of the human genome in 2000, the pharmaceutical [industry has made enormous strides into developing](https://www.financedigest.com/homewares-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "Homewares Market: Recent Industry Developments and Growth Strategies Adopted by Players") therapies to treat and prevent disease. [Gene therapy](https://www.financedigest.com/the-cancer-gene-therapy-market-to-ride-on-procedure-simulations.html "The Cancer Gene Therapy Market to ride on procedure simulations"), a technique that modifies the genetic code to correct cell irregularities, has been used to develop treatments for a range of conditions, including certain cancers. More recently, scientists have made far-reaching progress in [stem cell](https://www.financedigest.com/the-stem-cell-banking-market-to-keep-up-the-digitized-momentum.html "The Stem Cell Banking Market to keep up the digitized momentum") research, developing innovations in areas such as organ transplants. Advances are also underway in neuro-engineering, where theoretically brain implants could be used to treat conditions such as Alzheimer’s and Parkinson’s. Outside of therapeutics, progress is being made in diagnostics and imaging technologies, and in the delivery of services – for example, treating [patients with long-term conditions remotely](https://www.financedigest.com/the-remote-patient-monitoring-device-market-to-get-digitally-innovative.html "The Remote Patient Monitoring Device Market to get digitally innovative"). At present we believe that the healthcare sector is priced at a more attractive entry point, especially if [considered relative to the broader US equity market](https://www.financedigest.com/renault-considers-making-mass-market-evs-in-india-sources.html "Renault considers making mass-market EVs in India -sources"). Moreover, there have been wide divergences between sub-sectors, with biotech seeing the most underperformance. Potentially, this may present [opportunities for greater synergies and industry](https://www.financedigest.com/potassium-formate-market-surveys-opportunity-growth-and-forecast-by-end-use-industry-2021-2031.html "Potassium Formate Market Surveys, Opportunity, Growth and Forecast by End-use Industry 2021-2031") consolidation. In particular, the life cycle of new [product launches from conception to market](https://www.financedigest.com/new-product-launches-to-put-the-marker-pens-market-in-a-good-stead.html "New Product Launches To Put The Marker Pens Market In A Good Stead") is a multi-year/multi-decade process. Rather than commit significant resources and capital to developing therapeutics, it can be more cost efficient for larger [pharmaceuticals to acquire the research](https://www.financedigest.com/pharmaceutical-contract-sales-outsourcing-market-statistics-demand-and-forecasts-to-2031-examined-in-new-research-report.html "Pharmaceutical Contract Sales Outsourcing Market Statistics, Demand and Forecasts to 2031 Examined in New Research Report") and development of smaller, biotech pioneers. We believe that the long-term risk/reward profile of [healthcare represents a compelling opportunity](https://www.financedigest.com/ma-in-the-healthcare-industry-trends-opportunities-and-regulatory-considerations.html "M&A in the Healthcare Industry: Trends, Opportunities, and Regulatory Considerations"). However, as we have seen in recent months, [investors need](https://www.financedigest.com/exclusive-new-investor-backs-bt-says-fibre-jv-may-not-be-needed-source.html "Exclusive-New investor backs BT, says fibre JV may not be needed – source") to be prepared for volatility, particularly lower down the market-cap spectrum. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---