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A Fast-Growing Slice of the Healthcare Sector for Your Radar

Life science and diagnostics firms offer attractive growth and moats, but be wary of valuations.

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Michael Waterhouse: From a growth and economic moat perspective, we think the life science and diagnostic tools manufacturers have a lot to offer investors. Depending on their niche market exposure, we think most companies can sustain mid-single to high-single-digit growth, with the highest growth for firms having material sales from R&D and bioprocessing spending among biopharma customers as well as firms with molecular and genomic testing products. 

We also think many firms in this space benefit from economic moats, including wide-moat Waters and Agilent, thanks to intangibles and switching costs around their large installed bases of analytical instruments in liquid and gas chromatography. 

Michael Waterhouse does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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