Are healthcare stocks recession-proof?
Big pharma companies typically tend to show resilience throughout stock market turmoil. That’s down to several factors: increased government healthcare spending, an aging population, and robust balance sheets.
During recessions, investors prioritize fundamentals and closely scrutinize balance sheets, cash flows, and guidance. Consequently, many investors shift their focus from speculative growth stocks to blue-chip healthcare stocks boasting strong balance sheets.
The aging global population, driven by retiring baby boomers and the subsequent retirement of millennials, also significantly impacts healthcare spending. In Canada, seniors now comprise 18% of the population but account for 45% of public-sector healthcare spending. In the United States, retiring baby boomers are expected to push health spending to over $6 trillion by 2028.
The combination of increased government healthcare spending, the growing aging population, and the healthcare needs of millennials provides a favorable environment for healthcare stocks. These factors, coupled with the sector's historical outperformance during economic downturns, reinforce the long-term growth potential of the healthcare industry.
With healthcare stocks in focus, here’s a look at some of the companies making moves in the space this week: