1 of the best FTSE 100 shares to buy in a recession?

Despite the impressive performance of FTSE 100 stocks in 2023 until now, fear of recession continues to rise. While inflation has started to cool, it was still at 8.8% in January. And, subsequently, new interest rate hikes are expected to come in the coming months.

While contractionary monetary policy will undoubtedly help bring inflation back under control, it puts a lot of pressure on consumers. And prolonged exposure to rising prices, combined with higher mortgage bills, is a proven recipe for recession.

As the situation is gloomy, it is important to note that a sharp economic downturn cannot be guaranteed. But let’s assume the worst case scenario. What stocks should investors buy to protect (or even grow) their portfolios in a UK recession?

FTSE 100 shares

Economic volatility doesn’t just affect consumers. Businesses often find themselves in trouble as borrowing costs rise and growth becomes more challenging. But some industries have proven resilient to high winds. And health is one of them.

Even with the rising cost of living, people still need access to medicines and care. After all, infections and diseases don’t care about economics. And with new patients arriving every day, demand for the drug remains strong, despite the recession.

There are many FTSE 100 stocks serving the healthcare sector. But AstraZeneca (LSE:AZN) is my pick. The company specializes in fighting many diseases, but focuses primarily on cancer. And with an impressive patent portfolio, the group has had no problem growing its top and bottom lines over the last decade.

In addition, management plans to launch 15 new drugs by 2030, some of which are expected to generate $1bn+ in annual sales. Needless to say, this pipe is great for long-term performance. And with plenty of resilience to short-term economic volatility, AstraZeneca seems to be in a good position.

Investments always involve risk

But even one of the world’s largest pharmaceutical companies is not immune to disruption. Drug development is difficult. Beyond the scientific difficulties, bringing new treatments to market is a costly and nightmarish affair. Fun fact: more than 90% of drug candidates fail. And even market entrants are not guaranteed to recoup their typical multi-billion dollar development costs.

AstraZeneca has some deep pockets. And that’s definitely a handy advantage. But what I am concerned about is the number of patent expirations that are approaching. Looking at 2022 results, roughly half of the company’s revenue stream will come from off-patent drugs over the next five years.

If that happens, generic pharmaceutical companies could step in, copy AstraZeneca’s drug and squeeze cash flow. The company has many late-stage projects in the pipeline to offset the coming storm. However, as mentioned earlier, no regulator guarantees to give the green light.

So while the potential rewards are high, so are the risks. And investors should consider whether they like adding it to their portfolio. Personally, I’m optimistic. AstraZeneca has an excellent track record under the leadership of CEO Pascal Soriot.

Therefore, even with the other healthcare companies in the FTSE 100, AstraZeneca shares are what I want for my current portfolio.