Europe is home to many of the world’s foremost healthcare companies such as Novartis and Roche from Switzerland, Novo Nordisk from Denmark, Sanofi from France, and AstraZeneca and Glaxo-SmithKline in the United Kingdom. Healthcare is a big business in Europe despite the unification of the national health insurance systems of each European nation. Pharmaceutical and healthcare companies provide the resources that fuel the public health system infrastructure which these countries provide their respective citizens. As such, there is a growing list of investors as well as financial institutions willing to take a piece of the market. If you would like to invest in a European healthcare company yourself, you have to remember the following things.
Always Look for the Fundamentals
As in any other investments it is critical to understand a prospective health care company’s fundamentals such as its earnings drivers, cash-flow generation mechanisms, balance sheets, as well as other indicators of a company’s status as a worthwhile investment. For example, you can consider investing in pharmaceutical companies that possess active and valid patent protection on several key products that are projected to be a major driver of the company’s success. Additionally, biotech companies can be a good investment especially if their fundamentals show a trend towards the pharmaceutical business. Hospitals and medical centers remain top choices, however.
Consider Funds vs. Individual Stocks
While individual stocks may look tempting especially if you are being promised large dividends, a better investment strategy is to go for funds which is a collection of individual stocks. This maximizes your opportunity for gains while minimizing the risks of loss. However, it is often advisable to have a fund manager taking care of your investment.
Understand Implications of Existing Healthcare Laws
Do not underestimate the implications of healthcare laws in your investment. For example, prior to the Brexit, UK healthcare companies in the EU and vice versa enjoyed several benefits that even saw the establishment of a unified European Health Insurance Card or EHIC. The card allows residents of member countries to enjoy access to public healthcare services from among member countries. These services are provided free or at a reduced price. And since these healthcare services are essentially fueled by healthcare companies, there’s general concern about the Brexit’s implications both on the EHIC and the conduct of business in the continent. The point you have to consider is whether to invest in a UK company or an EU company.
Recognize the Impact of Politics
In the other side of the Atlantic is the US Presidential elections. Many European investors are anxiously awaiting the results of the US elections come November. This can also have significant implications in the movement of the European market so it would also be wise to take this into consideration as many European healthcare companies have offices in the US. Moreover, countries in Europe are also experiencing some shifts in the political landscape. All of these can have an impact in healthcare investments.
The healthcare sector is a large industry ripe for investment. However, it is crucial to choose wisely which European healthcare company to invest in.
Also published on Medium.
Darrel Lawerence says
Very neat post! I am looking for investment opportunities outside of the real estate realm and my eyes have now been opened to a new route! Thank You!