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Medical & Allied Health
Understanding the Healthcare Sector
The Medical & Allied Health sector is one of the largest and most complex in the Australian economy, accounting for close to a fifth of overall gross domestic product (GDP). The 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 Australian population and the advancing longevity 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. Consumption (or non-consumption) and production of medical services can involve significant externalities, particularly regarding infectious disease. Transactions costs are high in both the provision of care and the coordination of care.
Industries Within the Healthcare Sector
The 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 pharmaceuticals 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.
Major pharmaceuticals 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 Novartis AG and GlaxoSmithKline PLC.
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.
Health care facilities firms operate hospitals, clinics, labs, psychiatric facilities, and nursing homes. We have many private & public Hospitals that provide healthcare & medical services and which operates facilities that perform blood tests and other analysis.
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