These companies largely earn their competitive advantage from intangible assets, and their stocks are great choices for an investor’s watchlist.
The strongest long-term opportunities for healthcare companies primarily fall in three industries: drug manufacturing, medical devices, and diagnostics and research.
And all 20 of the best healthcare companies to invest in have intangible assets that provide a wide moat against competitors. This intangible-asset advantage is often derived from either patents or proprietary technology.
Patents are temporary government licenses that exclude competition from copying an invention. For example, in pharmaceutical companies, patents are necessary owing to the ease with which some drugs can be replicated. Similarly, patents are vital in the medical-devices industry to protect companies’ product designs.
Proprietary technology encompasses more-complex processes and tools than a company’s patents might cover—many companies keep their intellectual property as a trade secret rather than provide a public description in a patent application. In general, the more sophisticated and customized a product or service becomes, the more that proprietary technology plays a role in driving competitive advantage. In healthcare, this is seen in biopharma, medical devices, and contract research organizations.
Here, we highlight the 20 healthcare companies that made our list of the Best Companies to Own in 2024. These companies earned their spot on the list by both having carved out wide moats and having made smart capital decisions.
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