The strongest long-term opportunities for healthcare companies primarily fall in two industries: drug manufacturing and diagnostics and research.<\/p>\n
And all 20 of the best healthcare companies to invest in have intangible assets that provide a wide moat against competitors<\/a>. This intangible-asset advantage is often derived from either patents or proprietary technology.<\/p>\n 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\u2019 product designs.<\/p>\n Proprietary technology encompasses more complex processes and tools than a company\u2019s patents might cover\u2014many 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.<\/p>\n Here, we highlight the 20 healthcare companies that made to our list of the Best Companies to Own in 2026<\/a>. These companies earned their spot on the list by carving out wide moats and making smart capital decisions<\/a>.<\/p>\n 20 Best Healthcare Companies to Invest In<\/p>\n 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\u2019s watchlist.<\/p>\n You should consider buying only when they\u2019re trading below our price\/fair value estimate<\/a>, which assesses whether a stock\u2019s price is high or low compared with its fundamental value.<\/p>\n<\/p>\n Intangible Assets Give Drug Manufacturers Their Edge<\/p>\n All the drug manufacturers on the best companies list, both general and specialty, gain an edge from their intangible assets.<\/p>\n Johnson & Johnson JNJ<\/a> stands alone as a leader across major healthcare industries. \u201cThe company\u2019s diverse revenue base, strong pipeline, and robust cash flow generation create a very wide economic moat,\u201d writes Morningstar healthcare sector director Karen Andersen<\/a>. \u201cJohnson & Johnson\u2019s diverse operations are a major pillar supporting the wide moat, and the firm\u2019s R&D efforts support its robust revenue base. In the drug unit, strong innovative new drug launches are helping to offset increasing patent pressures.\u201d<\/p>\n 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.<\/p>\n Switching Costs Aid the Medical-Device and Diagnostic Industries<\/p>\n 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.<\/p>\n Thermo Fisher Scientific TMO <\/a>sells scientific instruments and laboratory equipment, diagnostic consumables, and life science reagents. Like key competitors Agilent A<\/a> and Waters WAT<\/a>, Thermo Fisher\u2019s analytical instrument business benefits from intangible assets and switching costs, says Morningstar regional director Alex Morozov<\/a>. \u201cThe company has long been a ubiquitous name in the life science supplies, going back to the days of Fisher catalog. The company\u2019s 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\u2019s salesforce is by far the largest in the industry, and its distribution network gives the firm unmatched reach and scale.\u201d<\/p>\n 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.<\/p>\n \u201cThe 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,\u201d says Morningstar senior analyst Debbie Wang<\/a>.<\/p>\n \u201cIt takes years for the orthopedic surgeons to become practiced enough on one vendor\u2019s tools and implants to deliver optimal patient outcomes, and after they have mastered them, they are reluctant to switch to another vendor where they\u2019d have to relearn some of it,\u201d Wang explains. \u201cFor this reason, the switching costs are the highest for companies like Zimmer Biomet ZBH<\/a> and Stryker SYK<\/a>.\u201d<\/p>\n The Top Health Information Services Company<\/p>\n The health information services subindustry has the lowest representation on our list: just GE HealthCare Technologies GEHC<\/a>. The medical imaging industry is a somewhat consolidated oligopoly, with the top three players (GE HealthCare, Siemens Healthineers SMMNY<\/a>, and Philips PHIA<\/a>) holding 70% of the global market share.<\/p>\n