The year 2019 has not been very smooth for the healthcare sector so far. Starting from the U.S.-China trade tussle, regulatory hurdles to a soft global economy, there have been various factors impeding growth for the sector.
In fact, all major healthcare indexes have underperformed their broader indexes year to date. In this context, the S&P 500 Health Care index has returned 3.8% in comparison to around 16% of the broader S&P 500 index.
Moreover, the Zacks Medical Sector has returned 4.3% year to date, underperforming the S&P 500 index.
Let’s take a closer look at the factors that have been making it a bumpy year for the healthcare sector.
Trade War Fiasco
The healthcare market is faced with short-term hurdles related to the U.S.-China trade tensions. According to a survey conducted by the Medical Imaging & Technology Alliance (MITA), the tariffs will cost medical product companies nearly $138 million every year.
Companies will be compelled to reduce workforce and investments in R&D to meet this ‘new and unnecessary expense’. This also raises the chances of costs being passed on to end users, making healthcare more expensive.
Moreover, the U.S. pharmaceutical industry has been hurt by rising raw material costs. Trump’s levying of trade-related tariffs on China has proved to be rather counterproductive for many industries which might make things worse for the healthcare industry.
Cyber Security Risks
As data management is an integral part of the healthcare system, protecting it is necessary. A survey report by KPMG revealed that around 81% of health care organizations experienced data breach in two years starting 2015-end. Going by the same source, medical device threats are ranked as a top information security issue by around one-third of industry executives.
For instance, last April, the FDA had to issue a Safety Communication to inform