By Dana Jacoby

The healthcare investment landscape in 2024 is likely to build on the trends of last year, while being marked by a strategic shift towards digital health tech, precision medicine, and private equity investments in innovative care models. These trends present significant opportunities for investors.

Here we review some of the key potential drivers of change this year to consider when investing in healthcare.

Healthcare stocks

Investment in healthcare stocks is likely set for promising growth in 2024, despite a slowdown in 2023 after several years of COVID-induced high performance.

Platform stocks—companies that own platforms for the development of new drugs rather than actual commercial therapies—gained prominence during the pandemic, exemplified by the success of companies like Moderna (MRNA) in rapidly developing COVID-19 vaccines.

Their ability to repurpose platforms in certain circumstances highlighted the strategic advantage of owning such platforms. However, like many pandemic plays, the initial surge in platform stocks was eventually met with a correction. The overenthusiasm seen during the pandemic led to inflated valuations, which were later adjusted with a market selloff.

At present, it could be argued that this selloff has been overdone, and these stocks may now be undervalued, presenting a potential investment opportunity in 2024.

Medical investment innovations

Another driver in the sector is the increasing focus on new innovations across areas like digital health technologies and precision medicine.

Digital health tech, such as wearable health monitors, telemedicine platforms, and AI-driven diagnostic tools, are transforming the way healthcare is delivered and experienced. Wearable devices now offer advanced capabilities like real-time monitoring of vital signs and early detection of health anomalies, contributing to preventive healthcare.

In precision medicine, breakthroughs in gene therapy and targeted drug delivery systems are enabling treatments that are specifically tailored to individual patient’s genetic profiles, improving treatment outcomes. Innovations in cancer therapy, such as CAR-T cell therapies, are demonstrating how precision medicine can lead to more effective and less invasive treatments.

These advancements in digital health technologies and precision medicine not only improve patient outcomes but also open new possibilities for growth in the healthcare sector. By leveraging these technologies, healthcare providers can offer more personalized, efficient, and cost-effective care, which in turn drives investment opportunities in these areas.

The rise of value-based models

One of the key trends for 2024 in the healthcare sector outlook is the growing emphasis on value-based care models. These models are designed to shift the focus from volume-based care, where providers are reimbursed based on the number of services provided, to a system that rewards providers for delivering high-quality, cost-effective care. The adoption of these models is being driven by the need to improve patient outcomes while controlling healthcare costs.

In 2024, significant advancements in value-based care are expected. Payers and providers are likely to deepen their collaboration to develop and implement strategies that emphasize preventive care, chronic disease management, and the integration of behavioral health. Metrics for success in value-based models include reduced hospital readmissions, improved patient satisfaction scores, and overall cost savings.

The increased adoption of value-based care models represents a significant shift in the healthcare investment landscape, as it aligns economic incentives with the goal of improving patient health outcomes.

2024 investment outlook challenges

Despite the optimistic trends, challenges such as rising interest rates, global political instability, and a US election year present potential disruptions. These factors could influence investment dynamics within the healthcare sector, highlighting the need for adaptability and strategic foresight in investment decisions.

The year ahead

As we move into 2024, the healthcare investment outlook for the year offers both promising opportunities and potential challenges. Investors focused on this sector will need to balance innovation-driven growth with the realities of an evolving economic and political climate.

To learn about what we do, or get further insights about healthcare investment trends and other hot topics, visit the Vector Medical Group Insights.

Disclaimer: The information does not constitute financial advice or recommendation and should not be considered as such.