The strongest long-term opportunities for healthcare companies primarily fall in two industries: drug manufacturing and diagnostics and research.

And all 20 of the best healthcare companies to invest in have intangible assets that provide a wide moat against competitors. This intangible-asset advantage is often derived from either patents or proprietary technology.

Patents are temporary government licenses that exclude competition from copying an invention. For example, in pharmaceutical companies, patents are necessary owing to the ease with which some drugs can be replicated. Similarly, patents are vital in the medical-device industry to protect companies’ product designs.

Proprietary technology encompasses more complex processes and tools than a company’s patents might cover—many companies keep their intellectual property as a trade secret rather than provide a public description in a patent application. In general, the more sophisticated and customized a product or service becomes, the more that proprietary technology plays a role in driving competitive advantage. In healthcare, this is seen in biopharma, medical devices, and contract research organizations.

Here, we highlight the 20 healthcare companies that made to our list of the Best Companies to Own in 2026. These companies earned their spot on the list by carving out wide moats and making smart capital decisions.

20 Best Healthcare Companies to Invest In

Because this list is built for the long term, rather than to identify presently undervalued companies, it may not be the right time to buy all these names. Rather, we believe these healthcare companies are strong choices for an investor’s watchlist.

You should consider buying only when they’re trading below our price/fair value estimate, which assesses whether a stock’s price is high or low compared with its fundamental value.

Intangible Assets Give Drug Manufacturers Their Edge

All the drug manufacturers on the best companies list, both general and specialty, gain an edge from their intangible assets.

Johnson & Johnson JNJ stands alone as a leader across major healthcare industries. “The company’s diverse revenue base, strong pipeline, and robust cash flow generation create a very wide economic moat,” writes Morningstar healthcare sector director Karen Andersen. “Johnson & Johnson’s diverse operations are a major pillar supporting the wide moat, and the firm’s R&D efforts support its robust revenue base. In the drug unit, strong innovative new drug launches are helping to offset increasing patent pressures.”

All 20 companies on this list benefit from intangible assets. Eleven have an additional moat source, either a cost advantage or a high switching cost.

Switching Costs Aid the Medical-Device and Diagnostic Industries

There are seven qualifying companies in the diagnostic and research or medical-device industries; all have an advantage from intangible assets and also benefit further from switching costs.

Thermo Fisher Scientific TMO sells scientific instruments and laboratory equipment, diagnostic consumables, and life science reagents. Like key competitors Agilent A and Waters WAT, Thermo Fisher’s analytical instrument business benefits from intangible assets and switching costs, says Morningstar regional director Alex Morozov. “The company has long been a ubiquitous name in the life science supplies, going back to the days of Fisher catalog. The company’s access to customer channels is unparalleled; the legacy Fisher (virtual) catalog still dominates the marketplace, and its next-largest competitors in the laboratory consumables segment are materially smaller. Thermo Fisher’s salesforce is by far the largest in the industry, and its distribution network gives the firm unmatched reach and scale.”

Medical devices, for their part, have high switching costs because surgeons develop expertise in using a differentiated set of tools, and device systems have components that are designed to work together.

“The highest switching costs in medical devices are in orthopedics, where all the device-makers have their own differentiated implants and the tools to install the implants,” says Morningstar senior analyst Debbie Wang.

“It takes years for the orthopedic surgeons to become practiced enough on one vendor’s tools and implants to deliver optimal patient outcomes, and after they have mastered them, they are reluctant to switch to another vendor where they’d have to relearn some of it,” Wang explains. “For this reason, the switching costs are the highest for companies like Zimmer Biomet ZBH and Stryker SYK.”

The Top Health Information Services Company

The health information services subindustry has the lowest representation on our list: just GE HealthCare Technologies GEHC. The medical imaging industry is a somewhat consolidated oligopoly, with the top three players (GE HealthCare, Siemens Healthineers SMMNY, and Philips PHIA) holding 70% of the global market share.

Morningstar senior analyst Jay Lee thinks intangible assets and switching costs give the firm its edge. “Intangible assets include GEHC’s comprehensive product catalog of cutting-edge products and extensive servicing networks. Switching costs primarily consist of integration of its hardware and software ecosystems into hospital workflows, and servicing contracts for long-lived capital equipment. Additionally, its pharmaceutical diagnostics segment also has intangibles and switching costs, which has built out an extensive global supply chain and boasts a decades-long track record of high quality and stable supply. Across its segments, its competitive advantages are tied to its scale and integration into healthcare systems, and we think it would be very hard to displace GEHC in these businesses within 20 years.”

Find the full list of Best Companies to Own and read about our selection methodology.