Why Healthcare Is Worth Revisiting as 2026 Draws to a Close

Healthcare deserves renewed investor attention because its historically low market ownership contrasts with improving earnings, innovation, financing and upcoming catalysts.

• Healthcare's S&P 500 weight is below its 11.3% average since 1990 and its 16.6% peak, while Information Technology has risen to nearly 38.3% from a 15.2% long-term average.
• Consensus forecasts put 2027 healthcare earnings growth at roughly 23%, second only to technology at 35%; 30 novel drugs had been cleared by the FDA through early August 2026.
• Drug development momentum includes Revolution Medicines' daraxonrasib, which nearly doubled survival in a pancreatic cancer trial and reduced the risk of death by 60%, while Merck and Moderna's mRNA vaccine became the first cancer vaccine to succeed in a randomized Phase 3 trial.
• Biopharma financing is tracking toward its second-strongest year on record and IPO activity toward its third-strongest; healthcare ownership and hedge-fund exposure are nevertheless near historic lows, although ETF flows have turned positive.
• Healthcare has beaten the S&P 500 by an average of 7.5% in U.S. midterm-election years, biotech by 15%, and pharmaceutical companies may use proprietary data and balance sheets to apply AI to the roughly $2 billion average cost of developing a drug.

Takeaway: The combination of depressed ownership, strong expected earnings growth, innovation, financing and seasonal catalysts supports revisiting healthcare, but the thesis remains exposed to sector-specific regulation, pricing, approval and product risks.