1 September 2025: Weekly Update – Healthcare Valuations and Long-Term Growth

Certainly, in the shorter-term the politics of healthcare policy, particularly in the US has been a cause for concern. However, in much of the developed world, the slow incessant path of demographics favours the sector as baby boomers, en masse, edge into the cohort of greatest medical need. The inexorable rise of average age, coupled with steady advances in treatment provides a source of demand that remains likely to resist economic cycles. In addition, for emerging economies, greater wealth puts medicines and care within reach of millions more. These together provide a surer and steadier backdrop for the sector than most other industries can claim.

The Polar Capital team has sidestepped the immediate obvious risks, having reduced exposure to the sector’s behemoths most threatened by reform, and shifted focus to mid-cap innovators in areas such as biotech, medical devices, and hospital firms, where political risk is reduced and enterprise can prosper.

Valuations add further appeal. Healthcare shares now languish at a relative discount rarely seen that puts them at levels which historically have marked points of inflection.