Health Care
1. Health care dominated by few big players that dont need to compete on price. As a result, health care companies are often highly profitable, with strong free cash flow and returns on captial.
2. Health care firms benefit from consistent demand, as well. Even when the economy is in the tank, people still get sick and need doctors and hospitals. As a result, the health care sector has traditionally been a defensive safe haven
3. Health care sector includes drug companies, biotechs, medical device firms and health care service organizations. Drug companies and medical devices firms are usually the most promising because they typically have the widest economic moats.
4. Economic moats in the form of high start-up costs, patent protection, significant product differentiation, and economies of scale. This makes it tough for new players to enter the market.
5. The market weighted ROE for health care firms have averaged 23% over the last five years, despite economic recession.
6. Health care's vast size and rapid expansion makes investing in the sector look like a no-brainier. But it is also fraught with complex relationships, intense controversy, and political pressures to regulate who gets what and who pays for it
7. Pricing is often opaque to health care consumers and irrelevant to physicians helping make the decisions.
Hallmarks of Success for Pharmaceutical Companies
1. Blockbuster drugs
2. Patent Protection
3. A full pipeline of drugs inc clinical trails
4. Strong sales and marketing capabilities
5. Big market potential
Investor's Checklist: Healt Care
1. Developing drugs is time-consuming, costly, and there are guarantees of success. Look for companies with long patent lives and full pipelines to spread the development risk
2. Drug companies whose products target large patient populations or significant unmet needs have a better chance of paying off
3. Make sure you have a big margin of safety for pharmaceutical companies with megablockbuster drugs that make u large percentage of sales. Any unexpected developments can send cash flow, and the stock price, reeling.
4. Unless you have a deep understanding of the technology, dont invest in biotech startups. Payoffs could be large, but the cash flows are so far out and uncertain that it's easier to lose your shirt than win big.
5. Don't overlook the medical device industry, which is full of firms with wide economic moats.
6. Cash is king for firms that rely on development. Make sure firms have enough cash or cash from operations to get through the next development cycle
7. Keep an eye on the government. Any drastic changes in Medicare/Medicaid spending on regulatory requirments can have a deep impact on pricing throughout the sector
1. Health care dominated by few big players that dont need to compete on price. As a result, health care companies are often highly profitable, with strong free cash flow and returns on captial.
2. Health care firms benefit from consistent demand, as well. Even when the economy is in the tank, people still get sick and need doctors and hospitals. As a result, the health care sector has traditionally been a defensive safe haven
3. Health care sector includes drug companies, biotechs, medical device firms and health care service organizations. Drug companies and medical devices firms are usually the most promising because they typically have the widest economic moats.
4. Economic moats in the form of high start-up costs, patent protection, significant product differentiation, and economies of scale. This makes it tough for new players to enter the market.
5. The market weighted ROE for health care firms have averaged 23% over the last five years, despite economic recession.
6. Health care's vast size and rapid expansion makes investing in the sector look like a no-brainier. But it is also fraught with complex relationships, intense controversy, and political pressures to regulate who gets what and who pays for it
7. Pricing is often opaque to health care consumers and irrelevant to physicians helping make the decisions.
Hallmarks of Success for Pharmaceutical Companies
1. Blockbuster drugs
2. Patent Protection
3. A full pipeline of drugs inc clinical trails
4. Strong sales and marketing capabilities
5. Big market potential
Investor's Checklist: Healt Care
1. Developing drugs is time-consuming, costly, and there are guarantees of success. Look for companies with long patent lives and full pipelines to spread the development risk
2. Drug companies whose products target large patient populations or significant unmet needs have a better chance of paying off
3. Make sure you have a big margin of safety for pharmaceutical companies with megablockbuster drugs that make u large percentage of sales. Any unexpected developments can send cash flow, and the stock price, reeling.
4. Unless you have a deep understanding of the technology, dont invest in biotech startups. Payoffs could be large, but the cash flows are so far out and uncertain that it's easier to lose your shirt than win big.
5. Don't overlook the medical device industry, which is full of firms with wide economic moats.
6. Cash is king for firms that rely on development. Make sure firms have enough cash or cash from operations to get through the next development cycle
7. Keep an eye on the government. Any drastic changes in Medicare/Medicaid spending on regulatory requirments can have a deep impact on pricing throughout the sector