The greater U.S. health sector has grown large, wealthy, and unpopular due to lackluster regulations and the fact that its services are, as a rule of thumb, not optional.
In 2025, the exact same factors remain at play, ensuring that pharmaceutical, health insurance, and medical device companies could prove the best investments in the current stock market.
Specifically, though some of these firms are reliant on offshore ingredients and manufacturing capacity – or the economy’s ability to absorb the high costs – the ongoing trade war is unlikely to affect the margins of giants such as Eli Lilly (NYSE: LLY) or United Healthcare (NYSE: UNH).
The benefits of a captive audience
On the one hand, these firms’ customers have little choice about utilizing their services – provided they can afford them – leading to a similar situation that tobacco companies enjoyed several decades earlier: a captive consumer base will absorb the costs no matter how high they become.
Indeed, the power of a captive base, even of one that is growing smaller, is well exemplified by the 12-month performance of the tobacco giant Philip Morris (NYSE: PM) as it had rallied 76.51% within the time frame. The upside is even more impressive because PM outperformed every Magnificent 7 company, including the much-lauded Nvidia (NASDAQ: NVDA).
Did the U.S. health sector just become more competitive?
Simultaneously, the Liberation Day tariffs could give the American healthcare industry a competitive advantage within the country as some of its biggest competitors – such as Novo Nordisk (NYSE: NVO) – are headquartered outside the U.S., making them more susceptible to the effects of the new dues and levies.
Elsewhere, the unique position of the greater U.S. health sector is unlikely to be challenged during the second Trump Administration.
Indeed, despite the calls to limit excessive patient costs, spearheaded by Senator Bernie Sanders’ constant comparisons between the per-patient healthcare and medication prices in the U.S. and other advanced nations, Republican focus on deregulation ensures the drive is unlikely to be furthered.
