Hundreds of companies around the world have been racing to produce treatments for Covid-19 and governments are doing what they can to support them. Although any companies that come up with a vaccine will be under pressure to produce it at cost price, there are a number of other reasons why healthcare companies are still well positioned for long-term growth.
As the world emerges from the coronavirus pandemic it is likely that there will be increased political support for public sector healthcare investment, which should help drive earnings and innovation. And healthcare companies tend not to have cyclical characteristics so can be an attractive area for investment in times of such uncertainty.
Edward Park, deputy chief investment officer at wealth manager Brooks Macdonald, says that healthcare remains one of his preferred equity themes. “Our longer-term view is that the post-coronavirus world will still be challenged by low growth and interest rates, as it was before the virus took hold," he explains. "As a result, we expect growth sectors such as healthcare to continue their relative strength."