Why Is Moderna, Inc. (MRNA) Among the Best High Growth Healthcare Stocks to Invest In Now?
Global Healthcare Spending Trends and Investment Opportunities
Investing in healthcare stocks is often seen as a defensive strategy during lean economic times. This is primarily because consumers generally do not reduce their consumption of essential healthcare services or prescription medications, even when the economy is struggling. According to the Centers for Medicare and Medicaid Services (CMS), national healthcare spending is projected to reach approximately $4.8 trillion in 2023, with an annual growth rate of 5.6% anticipated from 2027 to 2032. Furthermore, global healthcare spending soared to a record high of $9.8 trillion in 2021, amounting to 10.3% of the global Gross Domestic Product (GDP), as reported by the World Health Organization (WHO) in December 2023.
Despite the general upward trend in public health spending worldwide, this increase has been uneven. High-income countries spent nearly $4,000 per capita on healthcare in 2021, while 11% of the global population resided in nations that spent less than $50 per person annually. Alarmingly, a mere 0.24% of global health expenditure was allocated to low-income nations, which collectively account for 8% of the global population. The world witnessed a significant rise in public spending on health during the COVID-19 pandemic, but experts predict this trend is unlikely to continue as countries shift their focus back to pressing economic issues such as high inflation, slow growth, and mounting debt.
Emerging Trends in the Healthcare Sector
According to WHO officials, sustained public financing is essential for advancing toward universal health coverage, particularly in light of the ongoing challenges posed by climate change and other complex crises. As investors look into opportunities in the healthcare sector for the year ahead, key areas to monitor include pharmaceuticals, medical equipment, robotics, biotechnology, and therapies for neurodegenerative conditions.
One of the standout developments in the pharmaceutical sector is the rise of glucagon-like peptide-1 agonists (GLP-1s). These innovative treatments have significantly impacted the weight-loss medication market, transforming the competitive landscape. Notably, BlackRock reported a staggering compound annual growth rate of 45% in GLP-1 prescription volumes from 2019 to August 2023. Pioneering companies like Novo Nordisk and Eli Lilly, which developed popular drugs like Ozempic and Mounjaro, have contributed to this remarkable growth, stimulating interest in weight-loss medication stocks.
Moderna, Inc. (NASDAQ:MRNA): A Leader in mRNA Therapeutics
Moderna, Inc., a notable biotechnology company, specializes in developing messenger RNA (mRNA) therapeutics and vaccines. The company’s primary goal is to create mRNA-based treatments that target a range of diseases, including contagious infections, cancer, and rare genetic disorders. In September, Moderna unveiled promising results from a phase-one trial for mRNA-4359, an innovative cancer vaccine designed to assist the immune system in distinguishing between healthy and malignant cells. Remarkably, eight out of 19 participants in the trial, who were suffering from advanced solid tumors, did not experience any tumor progression or the emergence of new tumors, and no significant adverse effects were reported.
Moderna continues to demonstrate financial strength, achieving impressive results for Q3 2024, largely driven by its COVID-19 vaccine, Spikevax, which generated 50% more revenue than initially anticipated. The company reported a net income of $13 million and a revenue of $1.9 billion during this period. Looking ahead, Moderna projects its annual product sales will stabilize within a range of $3 billion to $3.5 billion.
The Baron Health Care Fund expressed confidence in Moderna’s potential in its Q1 2023 investor letter, stating, “Moderna, Inc. (NASDAQ:MRNA) is a leader in the emerging field of mRNA-based vaccines and therapeutic solutions and was one of the main producers of the COVID vaccine. Despite uncertainty surrounding the transition of COVID from a pandemic to a more commercial market, Moderna’s potential to innovate and disrupt the biopharmaceutical industry—from infectious disease vaccines to oncology—is compelling.”
The Bottom Line: Investing in Moderna
Given its strategic positioning, groundbreaking technology, and recent performance, Moderna, Inc. (NASDAQ:MRNA) ranks first among high-growth healthcare stocks to consider investing in now. While the company shows immense promise in its existing and prospective product lines, some market analysts express a belief that there might be higher short-term returns in artificial intelligence (AI) stocks. They suggest, for those interested in stocks potentially trading at less than five times their earnings, to look into the cheapest AI stock available, which might offer a more rapid return on investment compared to MRNA.
In conclusion, Moderna represents a compelling opportunity for investors seeking growth within the healthcare sector, particularly as global healthcare spending continues to expand amid economic uncertainties.
