The 20 Best Healthcare Companies to Own in 2025
Intellectual Property, Innovation & Patient Trust Drive the Industry Forward
The 2025 edition of Morningstar’s Best Healthcare Companies to Own showcases 20 exceptional firms that have distinguished themselves through strong intangible assets—chiefly patents, proprietary technology, and high switching costs. These qualities create what’s known as an economic moat, giving the companies a long-term edge over competitors and making them great additions to investors’ watchlists.
Key Insights from the Report
1️⃣ The Power of Intangible Assets
The biggest players in the healthcare sector—spanning drug manufacturing, diagnostics, and medical devices—derive their advantage from assets that aren’t physical but deeply valuable.
• Patents protect breakthrough drugs and medical devices from being copied, helping firms maintain pricing power.
• Proprietary technology involves specialized processes, algorithms, and systems that competitors can’t easily replicate.
These assets collectively secure long-term profitability and resilience.
2️⃣ Drug Manufacturers: Patents Protect Their Profitability
Pharmaceutical giants like Johnson & Johnson (JNJ) stand out for their blend of intellectual property and product innovation.
Morningstar’s Karen Andersen notes that J&J’s “robust R&D pipeline and steady stream of new drug launches” offset patent expirations. This continuous innovation supports a strong revenue base and reinforces investor confidence.
Many of the drug manufacturers on the list, including Novartis (NVS) and GSK (GSK), maintain dual moats—combining intellectual property with cost advantages or switching costs that keep competitors at bay.
3️⃣ Diagnostics & Medical Devices: The Power of Switching Costs
The second group of standout firms—such as Thermo Fisher Scientific (TMO), Agilent Technologies (A), and Zimmer Biomet (ZBH)—excel through differentiated technology and customer loyalty.
Morningstar’s Alex Morozov highlights that once hospitals and biopharma firms adopt specialized instruments or reagents, switching suppliers becomes costly and disruptive due to regulatory and operational continuity.
Similarly, in orthopedics, surgeons spend years mastering the use of specific implants and tools—making them unlikely to change vendors. That’s why companies like Zimmer Biomet (ZBH) and Stryker (SYK) enjoy extremely high switching costs and customer retention.
4️⃣ Health Information Services: Technology Integration Wins
Only one firm represents the health information services segment—GE HealthCare Technologies (GEHC).
GEHC’s dominance stems from its intangible assets and integration into hospital workflows. Its imaging and ultrasound technologies, combined with long-term service contracts, make it difficult for hospitals to switch providers.
According to analyst Jay Lee, “GEHC’s scale, innovation, and deep integration into healthcare systems make it almost irreplaceable within the next two decades.”
5️⃣ What This Means for Investors
These companies might not all be trading at attractive prices now, but they deserve a spot on every investor’s long-term watchlist. Their strength lies in innovation, intellectual property, and relationships that cannot be easily replicated.
Morningstar recommends buying them only when they trade below fair value, ensuring you invest with both conviction and discipline.
Key Takeaways:
• Focus on quality, not just price—companies with wide moats and intangible strengths tend to outperform over time.
• Patents expire, but innovation endures—consistent R&D investment is what truly sustains profitability.
• Switching costs = stability—firms with products deeply embedded in workflows or medical procedures enjoy consistent demand.
• Long-term view pays off—today’s valuations may fluctuate, but durable businesses grow stronger through economic cycles.
In summary:
The 2025 list of Best Healthcare Companies celebrates innovation, patient trust, and intellectual property as the core engines of durable growth. Whether it’s Johnson & Johnson’s medical breakthroughs, Thermo Fisher’s precision instruments, or GE HealthCare’s digital integration—each company reminds investors that lasting wealth comes from owning what others can’t easily copy.
Intellectual Property, Innovation & Patient Trust Drive the Industry Forward
The 2025 edition of Morningstar’s Best Healthcare Companies to Own showcases 20 exceptional firms that have distinguished themselves through strong intangible assets—chiefly patents, proprietary technology, and high switching costs. These qualities create what’s known as an economic moat, giving the companies a long-term edge over competitors and making them great additions to investors’ watchlists.
Key Insights from the Report
1️⃣ The Power of Intangible Assets
The biggest players in the healthcare sector—spanning drug manufacturing, diagnostics, and medical devices—derive their advantage from assets that aren’t physical but deeply valuable.
• Patents protect breakthrough drugs and medical devices from being copied, helping firms maintain pricing power.
• Proprietary technology involves specialized processes, algorithms, and systems that competitors can’t easily replicate.
These assets collectively secure long-term profitability and resilience.
2️⃣ Drug Manufacturers: Patents Protect Their Profitability
Pharmaceutical giants like Johnson & Johnson (JNJ) stand out for their blend of intellectual property and product innovation.
Morningstar’s Karen Andersen notes that J&J’s “robust R&D pipeline and steady stream of new drug launches” offset patent expirations. This continuous innovation supports a strong revenue base and reinforces investor confidence.
Many of the drug manufacturers on the list, including Novartis (NVS) and GSK (GSK), maintain dual moats—combining intellectual property with cost advantages or switching costs that keep competitors at bay.
3️⃣ Diagnostics & Medical Devices: The Power of Switching Costs
The second group of standout firms—such as Thermo Fisher Scientific (TMO), Agilent Technologies (A), and Zimmer Biomet (ZBH)—excel through differentiated technology and customer loyalty.
Morningstar’s Alex Morozov highlights that once hospitals and biopharma firms adopt specialized instruments or reagents, switching suppliers becomes costly and disruptive due to regulatory and operational continuity.
Similarly, in orthopedics, surgeons spend years mastering the use of specific implants and tools—making them unlikely to change vendors. That’s why companies like Zimmer Biomet (ZBH) and Stryker (SYK) enjoy extremely high switching costs and customer retention.
4️⃣ Health Information Services: Technology Integration Wins
Only one firm represents the health information services segment—GE HealthCare Technologies (GEHC).
GEHC’s dominance stems from its intangible assets and integration into hospital workflows. Its imaging and ultrasound technologies, combined with long-term service contracts, make it difficult for hospitals to switch providers.
According to analyst Jay Lee, “GEHC’s scale, innovation, and deep integration into healthcare systems make it almost irreplaceable within the next two decades.”
5️⃣ What This Means for Investors
These companies might not all be trading at attractive prices now, but they deserve a spot on every investor’s long-term watchlist. Their strength lies in innovation, intellectual property, and relationships that cannot be easily replicated.
Morningstar recommends buying them only when they trade below fair value, ensuring you invest with both conviction and discipline.
Key Takeaways:
• Focus on quality, not just price—companies with wide moats and intangible strengths tend to outperform over time.
• Patents expire, but innovation endures—consistent R&D investment is what truly sustains profitability.
• Switching costs = stability—firms with products deeply embedded in workflows or medical procedures enjoy consistent demand.
• Long-term view pays off—today’s valuations may fluctuate, but durable businesses grow stronger through economic cycles.
In summary:
The 2025 list of Best Healthcare Companies celebrates innovation, patient trust, and intellectual property as the core engines of durable growth. Whether it’s Johnson & Johnson’s medical breakthroughs, Thermo Fisher’s precision instruments, or GE HealthCare’s digital integration—each company reminds investors that lasting wealth comes from owning what others can’t easily copy.