Medical costs and prices are rising in the US. According to the Centers for Medicare and Medicaid Services, US healthcare costs increased from 7.5% to $4.9 trillion between 2022 and 2023. In 2023, the healthcare industry accounted for 17.6% of the US economy, up 17.4% from 2022.
The impact of tariffs on this ongoing trend is a key skew of competition in the healthcare industry, as more and more US companies rely on China for their next breakthrough chemical agreements, whether in the obesity or cancer sector. Versant Ventures Managing Director Carlo Rizzuto spoke about CNBC's “Fast Money” on February 7th about the impact of tariffs on healthcare. Rizzuto says tariffs could affect the sector in two ways. This is the first product made in China and sold in the US or other countries. The industry needs to see how tariffs are used in the market to understand how they affect such trade operations.
Second, and more precisely, the US medical industry relies heavily on China based on contract production and research. As a result, raising that price will probably make the market even more difficult. Cost hikes don't help manage the healthcare industry, which is already under pressure from investors.
Regarding China's major impact in the pharmaceutical and healthcare sector, Rizzuto said that the majority of healthcare companies use Chinese CROs or manufacturing partners in their capabilities in the research and development stages. As a result, it will have a major impact on how the country's biotechnology and pharmaceutical industry works. This trend is fairly common in businesses of all sizes.
In other words, the lack of infrastructure to promote relocation prevents healthcare companies from repurposing all of their externalized R&D and production to the US. Therefore, it is difficult to imagine how such a large-scale reuse would occur. The amount of tariffs imposed can be used to determine the cost of achieving this objective linearly.
Healthcare EBITDA will rise from a $676 billion starting point in 2023 to $987 billion at 7% CAGR in 2028, according to McKinsey. Despite the expected faster development in some regions, recovery from post-pandemic lows is expected to drive progress in several areas. Software platforms are essential to the healthcare ecosystem as they enable payers and providers to operate more effectively in complex environments.
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By automating procedures, fostering data connectivity and generating actionable insights, technological innovation (such as generator AI and machine learning) continues to provide opportunities for stakeholders across all industry industries. McKinsey predicts that increased utilization and widening pipelines (like cancer) will lead to a significant increase in revenue for special pharmacies. Specialist pharmacy profit pools continue to grow as a result of the increased use of specialist drugs.
This article began by screening iShares US Healthcare ETF (IYH) Top Holdings to focus on prominent companies within the US healthcare sector. From this list, we selected the top 10 holdings based on the weight of our ETF portfolio. We then ranked these stocks according to the number of hedge funds holding each company's position as of Q4 2024, based on data from Insider Monkey's hedge fund tracking database.
Why are hedge funds interested in the stocks they accumulate? The reason is simple. Our research shows that mimic the top stock picks of the best hedge funds can outperform the market. The quarterly newsletter strategy has chosen 14 small and large caps per quarter, returning 373.4% since May 2014, surpassing the benchmark by 218 percentage points (see more here).
Abbvie Inc. (ABBV): One of the best monarchs to invest in now
The pharmacist distributes the drug to the patient or chemist.
Number of hedge fund holders: 85
Abbvie Inc. (NYSE: ABBV) is listed as the 8th of the best healthcare stocks. It is a research-based pharmaceutical company that develops and sells products for the treatment of chronic diseases of oncology, gastroenterology, rheumatology, dermatology, virology, and a variety of other serious health conditions.
In addition to having a strong base, it also won $15.1 billion in the fourth quarter of 2024. This was 5.6% higher than analysts had predicted. The company's Ex-humira platform is a group of drugs in its pharmaceutical portfolio, and this expansion has been recognized. The platform increased revenue by more than 18% throughout the year, and increased revenue growth to 22% in the fourth quarter of 2024.
Analysts are cheerful about the growth of Abbvie Inc. (NYSE: ABBV) for two popular drugs, Skyrizi and Rinvoq. By 2027, annual sales of these drugs, which treat inflammatory bowel disorders, psoriasis diseases, rheumatism and dermatology, are expected to exceed $27 billion. Additionally, the business declared a 5.8% dividend increase effective in February 2025, taking on the company's 52-year dividend growth pattern.
Polaris Capital Management said about Abbvie Inc. (NYSE: ABBV).
“US biopharma/biotechnology companies are the top of the healthcare sector, with the majority of Holdings recording returns of over 10%. AbbvieInc. (NYSE: ABBV) has shown the growth of the top line of immunosuppressants Skyrizi and Rinvoq. Abbvie management continues to work through exclusive losses due to the loss of Humirizi or Skyrizi or Skyrizi or Skyrizi or Skyrizi or Skyrizi. Biosimilar.”
ABBV overall ranks 8th among innovative healthcare stocks to watch in 2025. While acknowledging the potential of ABBV as an investment, our belief lies in the belief that AI stocks offer higher returns and hold a greater promise to do so within a shorter time frame. There have been AI stocks that have risen since the beginning of 2025, and the popular AI stocks have lost around 25%. If you're looking for AI stocks that are more promising than ABBV, but are trading at less than five times the revenue, check out this report on the cheapest AI stocks.
Read next: According to the billionaire, buy 20 best AI stocks to buy now and the best best stocks to buy now.
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