Healthcare’s Performance on Wall Street: Why Stocks Are Dropping
By Christopher Wolfington
Healthcare stocks have been considered a generally safe bet for dividend investors in search of high-quality companies for years. This mirrors the overall healthcare industry, which, despite recent debate along with growing consumer concern and rising debt, has chiefly remained stable, highly profitable, and a potential growth opportunity for players across the entire sector even during times of economic downturn. Consumers will always need healthcare and medicine, making healthcare investment an optimal pick on wall street.
Drops in Healthcare Stocks
Despite Healthcare’s ideal reputation, healthcare stocks have recently been dropping in value, and the dwindling numbers aren’t new for this year. 2019 has been an underperforming year in the healthcare sector, and even with heavy selling throughout the past several weeks and a few daily solid gains, the sector’s underperformance compared to the rest of the equity market doesn’t seem to be on the mend quite yet.
Although the broader market has gained 8%, health care stocks are down 4%. Currently pharma companies appear to be avoiding the drops, although that success may be short lived.
The industry’s underperformance has come as a surprise for most, going against positive overall predictions for the market and great performance over the past 5 years.
Healthcare stocks were expected to rise, mirroring the projected rises in healthcare spending and swelling costs of goods and services, leaving many to wonder what has contributed to this sudden and unexpected change.
Along with fears of a global economic slowdown, the sudden drop appears to be a result of U.S. Senator Bernie Sanders’ introduction of a “Medicare for All” plan to congress, as well as the Senate finance committee’s concluding of a hearing to discuss the role pharmacy benefit managers play in drug pricing
According to Sanders, the Medicare for All plan would provide comprehensive healthcare benefits for all Americans regardless of their income, employment, or health status, and administer healthcare funding from a single government fund based on a uniform set of benefits. The plan would also change the way prescription drugs are priced and provide care without deductibles or paydays.
Although the plan has been met with heavy opposition, it is clear that the healthcare industry as a whole is currently undergoing a rapid change in the minds of both consumers, politicians, and industry players, and it’s unclear what Wall Street, and the rest of America, should expect from the healthcare industry throughout the next few years.
Christopher Wolfington, Chairman and CEO of FinPay, LLC, is a business leader and entrepreneur with over 29 years of experience in consumer and financial services. Mr. Wolfington is currently living in Philadelphia, PA and continues to use his entrepreneurial talent to identify key opportunities and solutions in high growth markets.