Healthcare in Focus

Healthcare, pharma and the risk of recession

Munich, 30 June ’22

Healthcare & Pharmaceutical stocks gear up to battle stress and deliver high performance in the second half of 2022

With the increasing risk of a global recession and the slowdown of economies across the world, investors grow more and more concerned about their portfolios.

Considering the last two years of battling Covid, healthcare and pharmaceutical industries have regained their importance and now attract investors with their consistent cash flow and dependability in the long term. Historically, it has also been shown to point towards the fact that pharmaceutical stock tend to deliver better performance than most other sectors in times of economic slowdowns.

Nevertheless, there are points of caution that need to be taken into consideration like the supply chain backlog and high costs. With limited and increasingly stressed finances, hospitals and medicine companies might find it harder to pass on these costs to the end-consumer.

On the market-front, pharma stocks have not been completely immune to the big sell-off in these past months, and are facing valuation struggles as well. Early-stage drugmakers are facing hardship as markets become unfavourable and funding diminishes. However, the rate of acquisitions for late-stage biotech firms have seen a recent growth, which is expected to rise steadily in the coming months, signifying a level of trust and confidence in the sector at large.

Finally, governments seems to be much more active in policy-making in regards to healthcare in the last few years and a risky policy does not seem to be very probable in the near-future.

Article by Swarnim Prakash

CM-Equity AG



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