Global Healthcare
2.5 Stars - Neutral
Sector Background
- The healthcare sector is made up of many moving parts, and is bolstered by growth from long-term secular drivers such as an ageing and chronically ill population.
- Amidst a climate of slower growth fraught with economic uncertainties, the healthcare sector stands out with its display of resilience.
What we like about
- Earnings for the healthcare sector are
supported by secular trends such as an ageing population, and a growing
healthcare expenditure.
- Defensive and growth opportunities arising from demographics and increasing innovation.
Sector Outlook
- While near-term challenges persist, select large pharmaceutical and biotechnology companies will be able to navigate the uncertainties, particularly those with strong product pipelines and earnings visibility.
- Over the longer term, we expect that rising sales volumes will more than compensate for near-term margin contraction, driven by broader accessibility and greater adoption of these medicines. However, in the near term, margin pressure remains a key headwind for 2026 under the MFN policy.
- Based on a fair P/E of 18x, this translates into upside potential of less than 10%.
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