Investing in Healthcare

All comments here have given some great information.

I agree that you want to figure out where you will focus, since different parts of healthcare have different levels of risk. You have clinical and FDA risk on the lifesciences / biopharma side, and you have various political factors affecting the services side. In the lifesciences world, there are established companies like ILMN who have significant product traction but room for additional upside through their pipeline products and growth in existing markets. In addition, many of the larger pharma companies are seeking growth through acquiring smaller biotech companies that are complementary to their existing product lines.

There are also much smaller companies that are still waiting for approval on their first product. Some people find these types of opportunities interesting, since you can profit heavily if the drug gets approved. Of course, the downside here is that you are taking binary risk, since an unfavorable FDA decision will tank the stock. I personally am too risk averse for these types of opportunities, but if you can develop an informed thesis as to why a certain drug will gain approval, or why the underlying technology may be of strategic interest to a large player, you can certainly earn a nice return.

To get yourself up to speed on the industry, I would recommend looking up the Deutsche Bank F.I.T.T. reports (I know they exist for various subverticals in services and biopharma). When I was in healthcare banking, these were helpful in learning about the industry. I also remember Piper Jaffray publishing some good material as well. You may have to go back a few years to find some of these, but they do a great job of explaining stuff in layman's terms. If I understood these without ever taking a biology class, I'm sure you will too