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Extensive research and investments in the healthcare sector appears to be a no-brainer, as the medical sector is not going away from our lives on one hand with all the illnesses and healthcare needs we are used to. Thus, to anticipate possible risks, one should take a detailed look at both the development and the downturn of the sector. One of the biggest risks is the regulatory risk that the healthcare sector is heavily exposed to. Healthcare is one of the most regulated industries and changes in laws, insurance regulations and approval procedures will have a direct impact on the profitability of a company. The policy can also result in the political risk. A significant policy alteration, such as new government healthcare plans, can lead to the containment of prices and can discredit the best of the companies. Litigation is often seen in the healthcare sector. Among others, litigation can result from malpractice claims and class-action lawsuits, especially for firms involved in pharmaceuticals or medical devices. Consequently, recessions can initiate falls both in elective surgery procedures and in the number of people enrolling for health insurance hence revenue could be affected. Despite the fact that people in the long run certainly will need health care, the road is crowded with variables and investors need to envision the situation both through the potential for growth and with reasonable caution about the risks that they should weigh for both start-ups and giants in this intricate industry.