Due to populations around the world getting older and chronic disease burden increasing, demand for healthcare services continues to rise.
I believe this trend will continue for several decades, which could make the healthcare sector a great place to look for investments.
Three healthcare shares that I feel could be long-term market beaters are listed below. Here’s why I like them:
Nanosonics Ltd (ASX: NAN)
Nanosonics is an infection control specialist which has been growing at an exceptionally strong rate over the last few years. This has been driven by the growing popularity of its trophon EPR product. This product provides healthcare organisations with a safe, versatile and simple way to prevent ultrasound probe cross-infection. Strong demand meant its installed base grew 18% in FY 2019 to 20,930 units. This led to a big jump in revenue thanks to a combination of unit sales and the recurring revenues from the consumables it requires. Despite its strong growth, it still only has around one-sixth of the overall market. Due to its quality, I expect further market share gains in the coming years. Combined with the release of new products, I expect this to lead to strong sales and earnings growth over the next decade.
Opthea Ltd (ASX: OPT)
Another healthcare share to consider buying is Opthea. It is a developer of novel biologic therapies for the treatment of eye diseases. I believe its OPT-302 combination therapy has enormous potential and could be a key driver of growth over the next decade. Last year the company unveiled very strong Phase 2b study results for OPT-302. If its Phase 3 trial proves just as successful, then the future could be very bright for Opthea. Especially given its sizeable market opportunity. The current standard of care treatments for wet age-related macular degeneration and diabetic macular edema had combined sales of ~US$10 billion in 2018. Though, there is always a risk that the trial may not go as planned. So it may be best restricting an investment to just a small part of your portfolio.
ResMed Inc. (ASX: RMD)
A final healthcare share to consider buying is ResMed. It has been growing at a very strong rate over the last decade and is now one of the world’s leading sleep treatment companies. Pleasingly, it has started the new decade just as strongly as it finished the last. In the first half of FY 2020, ResMed delivered a 22% lift in operating profit to US$368.9 million. The good news is that I believe it is well-placed to continue this strong form for some time to come. This is thanks to its world-class products and the massive number of undiagnosed sleep apnoea sufferers globally. The company estimates that there are a whopping ~1 billion people impacted by sleep apnoea globally, with the vast majority undiagnosed.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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