The ASX healthcare sector has been one of the top-performing sectors on the Aussie share market over the past year. Some healthcare shares have seen strong share price gains in this time, despite the market correction over the last few weeks.
ASX healthcare shares have also been impacted less than many other sectors due to fears about the coronavirus. Travel and tourism have been hit particularly hard, with shares in companies such as Corporate Travel Management Ltd (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT), and Qantas Airways Limited (ASX: QAN) all suffering heavy losses.
Here we look at two strong performers in the ASX healthcare space: CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD). Both of these companies are large-cap shares, meaning that they are amongst the largest 50 shares on the S&P/ASX 200 Index (ASX: XJO) by market capitalisation.
At the time writing, CSL shares have risen by 60% over the last 12 months, while ResMed shares have risen by 57%. This places them in third and fourth spots, respectively, in regards to the top-performing large-cap shares during this time, behind Xero Limited (ASX: XRO) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH).
CSL Limited
CSL has evolved over the last two decades to become a global market leader in blood plasma research and disease treatment, reaching people in more than 60 countries.
The healthcare provider has continually made substantial investments into research and development and I think that this has been a major driver of its success. CSL recently overtook Commonwealth Bank of Australia (ASX: CBA) to be the largest share on the ASX by market capitalisation, driven by its growing global presence and steadily increasing global demand for immunoglobulin products.
I believe that the ASX healthcare giant remains well placed for strong growth over the next five years and in the short term, it may actually benefit from the coronavirus outbreak due to increased demand for its products.
ResMed Inc.
ResMed is a designer and manufacturer of devices and cloud-based software solutions for the treatment of sleep apnoea and other chronic respiratory illnesses. It has been a strong performer on the ASX over the past few years in particular.
ResMed's strong recent growth has continued. For the three months ended 31 December 2019, the medical company reported revenue growth of 13% to US$736 million. This took ResMed's first-half FY20 revenue to US$1,417 million, which was up a very strong 14% over the prior corresponding period.
The strong demand for ResMed's products continues, particularly for its masks and accessories segment. The potential market for sleep apnoea remains massive, with an estimated one billion people globally impacted by sleep apnoea worldwide, and more than 80% undiagnosed cased globally. I think this places the company well for strong growth over the next two years.
