The healthcare sector consists of companies involved in the medical space in any number of different ways. As one of the largest and most complex sectors, healthcare encompasses a range of businesses, including ones that provide medical services directly, those that work to develop, create and market medical equipment and medicines, others that provide medical insurance and related products, and many more. Some of the largest healthcare stocks in the world include Johnson & Johnson (JNJ) and Pfizer, Inc. (PFE).
For much of 2018, healthcare stocks dominated the S&P. Late in the year, however, healthcare names were pulled downward by broader forces impacting the market and causing steep declines in the last few weeks of the year. While some healthcare companies have quickly reversed that trend, posting significant gains early in 2019, others have seen stock prices level off or even continue to slide downward. Part of the reason for this mixed performance has to do with a host of potential challenges to the industry in the new year, including regulatory uncertainties, fiscal policy concerns, the future of the Affordable Care Act (ACA) and more.
Here's a look at the top performing healthcare sector stocks from major U.S. exchanges and from January 2019. This list is drawn from the largest names in the sector; companies with market caps of $20 billion or more were considered. The list here is presented in order of monthly performance based on the opening stock price as of January 2, 2019 and closing price as of January 31, 2019. The performance has been compared to the S&P 500 Health Care Sector Index average returns of 6.10% as a benchmark.
1. Celgene Corp. (CELG)
- Market Cap: $64.74 billion
- Performance: 36.76%
2. Teva Pharmaceutical Industries Ltd. (TEVA)
- Market Cap: $18.30 billion
- Performance: 29.88%
3. Alexion Pharmaceuticals Inc. (ALXN)
- Market Cap: $28.89 billion
- Performance: 28.16%
4. Align Technology, Inc. (ALGN)
- Market Cap: $20.64 billion
- Performance: 22.27%
5. Anthem, Inc. (ANTM)
- Market Cap: $82.32 billion
- Performance: 19.23%
New Jersey-based Celgene develops and markets medical treatments for various cancers and inflammatory diseases. Celgene's most popular drug is called Revlimid, used to treat multiple myeloma and several types of transfusion-dependent anemias.
The biggest news surrounding Celgene in the new year has been that the company will be acquired by Bristol-Myers Squibb (BMY). BMY will purchase Celgene for $74 billion in a deal involving both cash and stock, a transaction that marks the largest acquisition in healthcare history. Both companies had previously faced struggles: in the case of Celgene, Revlimid is approaching a patent cliff that threatens to cut sales, while Bristol-Myers Squibb has not released a game-changing new drug treatment for many years. News of the acquisition likely bolstered Celgene's stock price early in the year. On the other hand, though, Celgene's pipeline remains strong, so there is at least one other reason why investors might be interested in this stock as well.
Teva is a multinational pharmaceuticals company headquartered in Israel. This company has made a name for itself primarily in providing generic drug equivalents to proprietary medicines, although it does also develop active pharmaceutical ingredients and a small number of proprietary products as well.
Teva was hit particularly hard in the month of December, as the company's stock fell by more than 28% for the month. In the first part of 2019, investor sentiment toward the company shifted, perhaps as a result of a realization that the decline was largely fueled by a broader market dip and not by circumstances specific to Teva. As a result, the company essentially reversed December's declines in January. However, financials released in February reveal that Teva's earnings per share declined by a significant margin (from 93 cents for Q4 2017 to 53 cents for Q4 2018) and that the company suffered net losses for the final quarter of 2018 of $3.24 billion. Going forward, Teva may have a tough time matching its January performance.
Alexion is a Boston-based pharmaceuticals company most famous for Soliris, a drug product used to treat rare disorders of the complement system. The company focuses its research and development on products related to the treatment of autoimmune diseases.
Alexion was one of the rare healthcare companies to see some positive news in the final weeks of 2018. Late in the year, the company received federal approval for Ultomiris, a drug designed to treat adult patients suffering from paroxysmal nocturnal hemoglobinuria, a blood disorder. Ultomiris may join Soliris as a leading treatment in its specialty area, providing Alexion a strong financial start to the new year.
Align Technology is a medical device company based in San Jose, California but with operations throughout the world. Align's area of focus is on orthodontic products, including 3D digital scanners and clear aligners which have become popular alternative to orthodontic braces in recent years. The company's most famous product is Invisalign, first marketed in 2000.
Late in the month of January, Align posted impressive financial results for 2018. Among other accomplishments, the company saw its revenue climb by more than 33% for 2018 to $2.0 billion. Invisalign continued to lead the way for the company, with a 2018 case volume of 1.2 million, up 31.9% year-over-year. Given these figures, it's easy to imagine Align Technology continuing to thrive as 2019 continues.
Anthem is the sole health insurance company to make our top five performers list for January 2019. This Indiana-based company is one of the largest health insurance management operations in the world. It offers a diverse set of healthcare plans to about 40 million American consumers.
Anthem stands to benefit from some of the changes experts have anticipated affecting the healthcare industry as a whole in the year to come. First, the industry's consumer base is expected to grow into the future, which should provide impetus for Anthem's continued growth as well. As government healthcare spending is likely to increase in the years to come, Anthem could benefit from these changes as well. On the other hand, continued uncertainty regarding the Trump administration's approach to the Affordable Care Act does pose a threat toward Anthem's stock price as well.
Healthcare stocks are typically seen as stable investments even in times of market tumult. While the industry itself took a hit late in 2018, many of the largest healthcare names have stabilized early in 2019, with some standouts even posting major gains.