Monday, September 5, 2016

Is the profit in the Healthcare sector reasonable?

This is a very controversial topic.   With aging population and rapidly rising healthcare cost, this is a topic on every country's concern list.  Now that I have read and researched each of the 89 healthcare self-made billionaires, I have a conclusion.

The profit is reasonable.  Here are the 4 reasons:
1.  The average net worth of a healthcare SMS is about $2.4B, which is more than $1B less than the average of $3.6B.  Clearly, if a youngster just want to make money, healthcare is not an attractive sector because the profit potential is below average.

2.  The long drug discovery period:
A youngster drop out of college at age 19 or 20, can make billionaires in 6 to 7 years.  The average time to become healthcare self-made billionaire is 25 years.  It is one of the longest.  Making money in the healthcare industry will test the maximum patience of the entrepreneur

3.  High Startup Cost:
To start a drug company, a hospital chain, a drugstore chain, a medical equipment firm  require enormous  amount of startup capital.  It is much easier to do it with software and fashion, where the startup cost is a few thousand dollars.

4.  Highly regulated environment
While there is almost no regulation on Fashion (I have written a eBook on 60 Fashion Self-made Billionaire) , almost no regulation on software (you don't need government approval to roll out a new web site or an app),  little regulation on real-estate , the regulation hurdle in healthcare is one decade for drugs, and 5 years for hospital etc.

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