what is the healthcare sector 
the healthcare sector consists of businesses that provide medical services manufacture medical equipment or drugs provide medical insurance or otherwise facilitate the provision of healthcare to patients understanding the healthcare sectorthe healthcare sector is one of the largest and most complex in the u s economy accounting for 18 of gross domestic product gdp in 2020 1 the u s healthcare sector benefits from a strong system of medical research and development in cooperation with the higher education system and the technology industry the aging u s population and the advancing senescence of the baby boomer generation are driving ongoing strong demand in the healthcare sector economically healthcare markets are marked by a few distinct factors government intervention in healthcare markets and activities is pervasive in part due to some of these economic factors demand for healthcare services is highly price inelastic consumers and producers face inherent uncertainties regarding needs outcomes and the costs of services patients providers and other industry players possess widely asymmetric information and principal agent problems are ubiquitous major barriers to entry exist in the form of professional licensure regulation intellectual property protections specialized expertise research and development costs and natural economies of scale within the sector the need for working and investment capital can vary greatly between pharmacutical companies and large facilities and those providing insurance and medical supplies consumption or non consumption and production of medical services can involve significant externalities particularly regarding infectious diseases transactions costs are high in both the provision of care and the coordination of care industries within the healthcare sectorthe healthcare sector contains a diverse array of industries with activities ranging from research to manufacturing to facilities management drug manufacturers can further be broken down into biotechnology firms major pharmaceutical firms and makers of generic drugs the biotech industry consists of companies that engage in research and development to create new drugs devices and treatment methods many of these companies are small and lack dependable sources of revenue their market value may depend entirely on the expectation that a drug or treatment will gain regulatory approval and fda decisions or rulings in patent cases can lead to sharp double digit swings in share prices examples of larger biotech firms include novo nordisk nvo regeneron regn alexion alxn vertex vrtx gilead sciences inc gild and celgene corp celg major pharmaceutical firms also engage in research and development but tend to focus more on manufacturing and marketing an existing portfolio of drugs than the typical biotech firm these companies tend to have more dependable streams of revenue and a more diversified pipeline of drugs in the research and development stages making them less dependent on make or break drug trials and their shares less volatile examples of major pharmaceutical firms include johnson and johnson roche pfizer eli lilly novartis ag glaxosmithkline and astrazeneca some pharmaceutical firms specialize in generic drugs which are identical to name brand drugs but no longer enjoy patent protection as a result there is often competition to manufacture identical drugs leading to lower prices and thinner profit margins an example of a generic drugs firm is teva pharmaceutical industries ltd medical equipment makers range from firms that manufacture standard familiar products scalpels forceps bandages and gloves to those that conduct cutting edge research and produce expensive hi tech equipment such as mri machines and surgical robots medtronic plc is an example of a medical equipment maker managed healthcare companies provide health insurance policies the big five firms that dominate the managed medicaid industry are unitedhealth group inc anthem inc aetna inc molina and centene 2healthcare facilities firms operate hospitals clinics labs psychiatric facilities and nursing homes examples include laboratory corp of america holdings which operates facilities that perform blood tests and other analyses and hca healthcare inc which operates hospitals and other healthcare facilities in the u s and u k healthcare in the u s and the oecdaccording to the oecd some of the highest quality care in the world can be found in the u s but in terms of some measures of health the u s lags other wealthy developed countries life expectancy is 78 9 years according to the oecd below the oecd average of 80 the oecd s 38 members are mostly rich industrialized countries in europe and north america 34despite these subpar results the u s spends far more than any other country on healthcare measured per head of population 10 948 5 this situation has led to a number of national reform efforts including the affordable care act investors in the healthcare sector face considerable political risk as a result of uncertainties around the push and pull between politics and industry interests 