The healthcare equipment sector is diverse and, following the arrival of Al Noor Hospitals (ANH) and NMC Health (NMC), it's increasingly international. The former joined the London market in June 2013 despite acting as a healthcare provider exclusively in Abu Dhabi. Its reasons for listing are now becoming clear: succession. Last October the company's founder, Dr Kassem Alom, stepped down as chief executive in favour of Ronald Lavater, an American.
NMC Health is a similar business, also headquartered in Abu Dhabi but with hospitals throughout the United Arab Emirates. Healthcare reforms in Dubai are playing into NMC's hands: the city's decision to roll out mandatory health insurance will inevitably boost patient numbers. But investing in these fast-growing Middle Eastern businesses is expensive. Both stocks trade on roughly 22 times forward earnings, which leaves their growth prospects largely priced in for now.
Smith & Nephew (SN.) was often cited as a takeover target last year: analysts suspected the med-tech giant might catch the attention of US companies seeking to reduce their tax bill through a foreign merger. Towards the end of 2014, the US government passed new legislation to make tax-driven deals more difficult, but that shouldn't detract from what remains a quality business. Sales across China, India, South Africa and the Middle East rose 17 per cent in the second quarter, while the US division outperformed established European markets with 4 per cent sales growth. The US performance was boosted by the £1bn acquisition of medical technology company Arthrocare in May, but chief executive Olivier Bohuon has ruled out a tax-driven tie-up.