Almost an inelastic demand for healthcare products and solutions has historically helped healthcare stock provide a better hedge against inflation than gold. Moreover, with the emergence of the COVID-19 pandemic, the immense need for viable vaccines and drugs, combined with rising capital inflows for R&D projects, has helped the industry attract significant investor attention. This is evident from the Health Care Select Sector SPDR ETF’s (XLV) 10.1% returns over the past year. Global healthcare spending is expected to reach $10.06 trillion this year.
While the multi-decade high inflation, along with supply chain constraints, looming interest rate hikes, and geopolitical issues, have kept the benchmark stock indexes under pressure, the healthcare sector’s solid growth prospects based on the growing needs of an aging population, integration of advanced technologies, and breakthroughs in clinical trials could help it withstand the market pressure and perform steadily. The global consumer healthcare market is expected to grow at an 8.6% CAGR to reach $6.65 trillion by 2028.
