Money Peak: Weekly Healthcare Sector Report | July 18–25, 2025

🩺 Market Performance Overview

The healthcare sector continued to face challenges last week, experiencing a slight decline of 0.73% according to the latest sector data. This development contrasts with other sectors such as energy (+0.98%) and basic materials (+0.84%), which recorded positive results. Of particular relevance to investors: the healthcare sector is undergoing a phase of consolidation, while certain subsectors like medical technology and biotech show significant differentiation.

The current market situation is characterized by ongoing regulatory uncertainties and rising healthcare costs. Simultaneously, some companies benefit from strong product pipelines and innovative therapeutic approaches, leading to increased polarization within the sector.

📊 Key Industry Developments

The past week saw several significant developments in the healthcare sector:

1. UnitedHealth Under Pressure
UnitedHealth Group experienced a dramatic share price drop of 4.76% after confirming a criminal investigation by the US Department of Justice into its Medicare billing practices. This not only impacted UnitedHealth itself but also negatively affected the entire insurance sector. The situation highlights the heightened regulatory risks faced by health insurers.

2. Positive Signals in Pharmaceuticals
Johnson & Johnson demonstrated relative strength with a slight increase of 0.27%. The company announced its participation in the Wells Fargo Healthcare Conference in September, indicating strategic communication efforts. Noteworthy is also the strong performance of the "Innovative Medicine" division, which continues to report solid growth rates despite the Stelara patent expiration.

3. Expectations for Quarterly Results
The upcoming week will be crucial for the sector as several major players are set to release their quarterly results. Merck and UnitedHealth will report on July 29, followed by AbbVie on July 31. Analysts expect a decline in earnings for Merck, while AbbVie is anticipated to post earnings growth.

🔬 Subsectors in Focus

Pharmaceuticals & Biotech

Sentiment among traditional pharmaceutical companies remains subdued. Pfizer stagnated at $25.35, still grappling with waning COVID demand. On a positive note, the company finalized a global licensing agreement with 3SBio for a bispecific antibody product (SSGJ-707), targeting PD-1 and VEGF. This development strengthens Pfizer’s position in oncology research.

Johnson & Johnson shows signs of recovery, bolstered by its robust pipeline and FDA filing for the oral psoriasis drug Icotrokinra, which showed promising results in Phase III studies.

Medical Technology

This subsector continues to present growth opportunities through technological innovation. Companies focusing on robotic surgery and minimally invasive procedures exhibit particular resilience to the general industry challenges.

Healthcare Services

The revelations at UnitedHealth Group cast a shadow on the insurance sector and could lead to heightened regulation. Investors should closely monitor political developments in this area.

💊 Company Spotlight

📰 Important News of the Week

1. Johnson & Johnson announced its participation in the Wells Fargo Healthcare Conference on September 3, 2025, where management will be present for a fireside chat.

2. Pfizer finalized a global licensing agreement with 3SBio, providing exclusive rights for the development, manufacture, and commercialization of the bispecific antibody SSGJ-707 outside of China.

3. UnitedHealth confirmed a criminal investigation by the US Department of Justice regarding its Medicare billing practices, two months after dismissing related reports as “irresponsible.”

4. Johnson & Johnson filed for FDA approval of its oral psoriasis drug Icotrokinra following successful Phase III trials.

5. Merck announced its fourth quarter 2025 dividend, underscoring the company’s confidence in its financial stability.

🔮 Outlook and Forecast

The healthcare sector faces a crucial period. The forthcoming quarterly results will provide key insights into the financial health of leading companies and may set the direction for the remainder of the year.

The regulatory landscape remains a significant factor. The DOJ investigation of UnitedHealth could have far-reaching impacts on the insurance sector, leading to increased scrutiny across the industry.

Innovative therapies and product pipelines remain key to differentiation. Companies with solid research and development portfolios, particularly in oncology and chronic diseases, are likely better positioned to navigate headwinds.

🎯 Investment Recommendations

1. Focus on Innovation: Invest in companies with strong product pipelines and innovative therapies. Particularly, Johnson & Johnson and Merck show strength in this area, with Merck continuing to gain market share through Keytruda.

2. Leverage Dividend Strength: In a volatile market environment, companies like Pfizer with a dividend yield of 6.71% and AbbVie with 3.39% offer attractive income opportunities. These can serve as a buffer against market volatility.

3. Be Aware of Regulatory Risks: The UnitedHealth situation illustrates how quickly regulatory issues can arise. Diversify your healthcare holdings to minimize individual regulatory risks.

4. Keep an Eye on Quarterly Results: The upcoming earnings season will be pivotal. Prepare for potential volatility and use it strategically to make acquisitions of quality companies trading below the sector average.

5. Do Not Forget Long-Term Demographic Trends: Despite short-term challenges, the long-term outlook for the healthcare sector remains positive due to the ageing population and rising healthcare needs. Use market weaknesses to build long-term positions.

Note: This information is for informational purposes only and does not constitute personalized investment advice. Always consider your personal risk tolerance and financial situation before making investment decisions.