3 Big Healthcare Trends Wall Street Is Overlooking

By Cheryl Swanson

The chief market strategists at Wall Street’s biggest banks and investment firms don’t get things right all the time. In fact, as Foolish columnist Morgan Housel pointed out in “The Blind Forecaster,” you’d be shocked at how disastrously bad their track record is. 

But what about healthcare stocks and sector trends? And can savvy investors capitalize on Wall Street’s oversights? We asked three Fools to pinpoint what they believe Wall Street is overlooking right now in healthcare.

Todd Campbell: Wall Street may be underestimating the impact that biosimilars could have on the healthcare industry. Biosimilars are similar, but not exact copies, of biologic drugs that are among the planet’s most expensive and profitable medicines.

Until recently, the fact that biologics are made from living organisms made them too complex and costly for generic drugmakers to duplicate. However, innovation and an FDA that has finally come up with a pathway for the approval of biosimilars is turning biosimilars into one of the most exciting areas in drug development.

Companies like Novartis  (NYSE: NVS  ) Sandoz unit and Pfizer‘s Hospira business are knee-deep in researching biosimilars. Biotech goliaths Amgen  (NASDAQ: AMGN  ) and Biogen (NASDAQ: BIIB  ) are working on them too. The flurry of activity comes ahead of roughly $70 billion in branded biologics losing patent protection by 2018. And that’s likely to be just the start. That’s because researchers estimate that healthcare payers will be forking over roughly $178 billion for biologic medicines by 2017.

Dan Caplinger: One trend that has been going on for years is the move among employers to self-insure more of their healthcare-cost exposure.


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