Over recent weeks healthcare stocks have climbed back out of correction territory. As markets have absorbed information about the Covid-19 pandemic, both optimistic and pessimistic, the markets as a whole have rallied.
If crises begin with panic and over-reaction they can correct quickly as a truer picture emerges.
Healthcare stocks look well placed to lead the recovery. One reason for this is obvious. There has been an immense demand on health services, with vast amounts of public money being diverted into research and resources.
There are over 70 vaccines for Covid-19 currently under development. The companies that are first to develop a safe, successful vaccine are likely to be richly rewarded by governments.
The list of companies involved includes big players like Gilead Sciences and Pfizer, and smaller biotech firms. It’s the latter that perhaps have the best potential for significant growth in their share value.
With the most likely outcome being a range of different viruses adopted in different countries there’s likely to be a number of opportunities for investors over the coming months and years.
It’s not just about vaccines. The crisis has exposed significant failings in some of the world’s largest health systems. A shortage of equipment, drugs and human resources have hampered efforts to contain the virus.
There’s been a rush to source PPE and anti-viral drugs, with suppliers struggling to meet demand.
When the initial crisis ends it’s likely that countries will look to stockpile as much as possible. This will likely mean that overall production capacity will need to be increased as well.
This sustained increase in demand is likely to be a boost for biotech, pharmaceutical and medical device stocks.
It could also give a further boost to AI solutions. Robotic devices are already being used in some hospitals to deliver virus and bacteria destroying blasts of ultraviolet light.
A Time Of Opportunity
If initially the virus sent the markets into a state of panic, the months and years that follow are likely to be a time of opportunity.
Companies that can help meet the need for greater security in the face of viral and other threats will be well placed to benefit.