When it comes to sectors that have long-term growth potential, it’s hard to look past healthcare. An ageing population, rising wealth in emerging markets, and the increasing prevalence of major health issues are dominant structural forces. And they mean demand for healthcare looks set to increase significantly in the years ahead.
In terms of healthcare stocks, British investors have many options. Whether you’re looking to invest in a large-cap FTSE 100 healthcare stock, or an under-the-radar small-cap healthcare stock, there are plenty of investment opportunities. With that in mind, here’s a look at some UK healthcare stocks I believe could be worth checking out if you want to invest in healthcare.
Large-cap healthcare stocks
In the large-cap area of the market (the FTSE 100), there are a number of prominent healthcare stocks. The largest is AstraZeneca. It’s a global, science-led biopharmaceutical company. It specialises in oncology (cancer), cardiovascular and metabolic diseases, and respiratory, inflammation and autoimmune diseases.
Then there’s GlaxoSmithKline. Its area of specialism is pharmaceuticals, vaccines, and consumer healthcare products. Recently, GSK reached an agreement with Pfizer to combine their consumer health businesses. The combined entity will be a market leader in pain relief, digestive health, and therapeutic oral health.
Also in the FTSE 100, there’s Smith & Nephew. It specialises in joint replacement systems and looks set to benefit from the world’s ageing population. And then there’s Hikma Pharmaceuticals, which manufactures branded and non-branded generic medicines.
In the mid-cap space, there’s a handful of healthcare stocks that could be worth a closer look. One of the larger mid-caps is ConvaTec. It offers products and services in the areas of wound and skincare, ostomy care, continence, and critical care.
Another largish mid-cap healthcare stock is Mediclinic. It’s an international hospital group with operations in a number of companies across the world. Also in the mid-cap area, there’s UDG Healthcare. It provides advisory, communication, and packaging services to the healthcare industry.
In the small-cap area of the market, there are many options if you’re looking for healthcare stocks. I’ll point out, however, that some of these stocks are more speculative in nature. So a cautious approach is sensible.
One small-cap healthcare company that appears to have potential is EMIS. It provides software and information technology services to the healthcare industry. This means it’s a play on both health and technology.
Another smaller company that looks interesting in my opinion is Advanced Medical Solutions. Its area of focus is advanced wound care products and surgical dressings.
There’s also Alliance Pharma, which owns or licenses the rights to over 90 pharmaceutical and consumer healthcare products. It has grown significantly in recent years.
Some other small-cap stocks that could be worth a closer look include clinical trials company Ergomed, antibody specialist Bioventix, and radiology business Medica.
In conclusion, there are many different healthcare stocks listed in the UK. This means that there are plenty of ways to gain exposure to the sector. The key, as always, is to do your own research and diversify your capital across a few companies. This will give you the best chance of profiting from the sector in the long run.
Edward Sheldon owns shares in GlaxoSmithKline and Smith & Nephew. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Advanced Medical Solutions, Alliance Pharma, AstraZeneca, Bioventix, Emis Group, Hikma Pharmaceuticals, and UDG Healthcare. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.