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BELLEVUE ASSET MANAGEMENT AG Bellevue Asset Management AG: Five opportunities for healthcare investors

Directive transparence : information réglementée

25/01/2023 07:00

Bellevue Asset Management AG / Key word(s): Market Report
Bellevue Asset Management AG: Five opportunities for healthcare investors

25.01.2023 / 07:00 CET/CEST


Media release of January 25, 2023

Five opportunities for healthcare investors

Bellevue Asset Management casts a spotlight on five major trends in the healthcare sector for 2023 and outlines their potential from an investor’s perspective.

From Dr. Cyrill Zimmermann, Head Healthcare Funds & Mandates and member of the Executive Board, Bellevue Asset Management AG

Remarkable technological progress

The way forward in developing novel therapeutics that repair defective genes or modulate gene expression levels is becoming increasingly clear. This, in turn, has increased confidence that in vivo gene therapy can produce successful results if the right R&D approach is taken. Gene editing in particular stands to garner more attention as a means of treating rare genetic diseases as well as cancer going forward.

Small-molecule drugs that target genetic disorders are increasingly being used thanks to innovations in the field of big data and AI. Researchers are also expected to achieve breakthroughs in inhibitory siRNA and antisense RNA therapies for rare diseases such as ATTR amyloidosis and hypertriglyceridemia (Lp(a)), as well as for cardiovascular diseases. Alnylam, Ionis and Arrowhead are currently the key players in this area.

2023 will also be an interesting year for combination therapy strategies based on mRNA vaccines, be it to treat COVID-19/influenza or RSV, or other infectious diseases. This same technology is also being used to develop therapeutic cancer vaccines. We are expecting data on this front, too, during the course of 2023.

Neurology set to become an even more important topic in 2023

The ongoing quest to develop effective drugs for Alzheimer's disease will enter a new round in 2023. Market potential is huge. Major clinical advances were made last year. Lecanemab, an antibody developed by Eisai/Biogen for Alzheimer's patients, was granted marketing authorization in the US on January 6, 2023. Donanemab from Lilly is likewise expected to receive regulatory approval as an Alzheimer’s treatment later this year, provided the forthcoming trial results are positive. Karuna's KarXT is a new beacon of hope for schizophrenia patients.

Chaff will be stripped away, revealing true gems in the digital health space

Macroeconomic factors such as the future path of interest rates and sector rotation activity weighed on the performance of digital health stocks from 2021 to the summer of 2022. The situation has eased in the meantime and today's valuation levels are attractive.

Fundamental business trends in digital health continue to point to solid growth. Digital medtech companies in particular are expected to benefit from the normalization of patient numbers in the wake of the pandemic and the release of previously pent-up demand for non-emergency procedures.

Although our outlook for the industry is very positive, we believe stock-picking will remain crucial for investment success in 2023. We therefore expect investors to flock to top-quality companies with business models that are definitely commercially successful and that are turning a profit or are about to do so, and that these stocks are likely to outperform.

Big Pharma is in a strong position

The past has shown that pharmaceutical companies perform better when interest rates are on the rise or at high levels, and during the first half of a recessionary cycle. At present there still is a risk of further central bank rate hikes and/or a global economic slowdown, so pharma stocks might stay on investors' shopping lists for a while. The investment case for pharmaceutical stocks also remains compelling in view of their strong near-term cash flows, high profit margins, reasonable stock valuations, and strong pricing power. We expect M&A activity to pick up in 2023 given the sound balance sheets and more reasonable valuations of small and mid cap biopharmaceutical names. Divestments will likely remain an issue too, as recently seen at J&J and Novartis.

Mega-blockbuster drugs for highly prevalent diseases that are viewed as transformative treatments with huge market potential will likely capture the most attention. In addition to progress on the clinical trial front and regulatory approvals of new Alzheimer's treatments, we also expect strong obesity drug sales in 2023.

There are two other developments in the pharma subsector that we would like to comment on: Firstly, we view 2023 as a year in which biosimilars gain renewed momentum as a wave of Humira biosimilars are likely to be launched. This development can be viewed both as an opportunity and a threat to the pharmaceutical industry. Secondly, 2023 is a year in which new mechanisms of action (MOA) will have a transformative effect not only in very rare diseases, but also in major diseases (gene therapy for hemophilia/DMD, cell therapy for diabetes, RNAi for high blood pressure and Alzheimer's disease, mRNA vaccines for cancer).

Asia healthcare names – risk of being delisted in the US defused

Subsiding geopolitical tension between the US and China could reduce risk premiums, especially for Chinese companies that have substantial international activities. An initial move in this direction, observed in December, was encouraging: The Public Company Accounting Oversight Board (PCAOB) announced that, in an historical first, Chinese authorities had allowed the US entity to inspect and investigate completely the audit reports of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong. This largely eliminated the acute delisting risk for Chinese ADR stocks, including those of biotech companies.

China's trilemma – zero-COVID policy, economic growth, and social stability – ultimately led to a much quicker-than-expected reopening of its economy. The vaccination rate of China’s geriatric population and intensive care unit utilization rates will be closely monitored during the first few months of 2023 to determine whether the country’s healthcare system can cope with the surge in COVID-19 cases. As the pandemic winds down, the growing acceptance of digital health solutions will accelerate the growth of digital healthcare companies in China.

www.bellevue.ch/healthcare

 

Author: Dr. Cyrill Zimmermann
Dr. Cyrill Zimmermann is Head of Healthcare Funds & Mandates and a member of the Executive Board of Bellevue Asset Management. He founded Adamant Biomedical Investments in 2001 and managed the investment boutique until its acquisition by Bellevue in 2014. Cyrill Zimmermann holds a PhD from the University of Zurich.

 

Contact
Bellevue Asset Management AG, Seestrasse 16 / P.O. Box, CH-8700 Küsnacht/Zurich,
Tanja Chicherio, tel. +41 44 267 67 09, tch@bellevue.ch

www.bellevue.ch

 

Bellevue – Excellence in Specialty Investments 
Bellevue is a specialized asset manager listed on the SIX Swiss Exchange with core competencies covering healthcare strategies, entrepreneur strategies, alternative and traditional investment strategies. Established in 1993, Bellevue, a House of Investment Ideas staffed by 100 professionals, generates attractive investment returns and creates value added for clients and shareholders alike. Bellevue managed assets of CHF 9.6 bn as at June 30, 2022.

Disclaimer: This document is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The information and data presented in this document are not to be considered as an offer to buy or sell or an invitation to subscribe any securities or financial instruments. The information, opinions and estimates contained in this document reflect a judgment at the original date of release and are subject to change without notice. Liability for the accuracy or completeness of all information in this document is expressly disclaimed. This information does not take into account the specific or future investment objectives, the financial or tax situation or the particular needs of any specific recipient This document does not constitute independent investment research. Interested investors should always seek professional advice before making an investment decision. The information in this document is provided without any guarantees or warranties, for information purposes only, and is intended only for the personal use of the recipient. Every investment involves some risk, especially with regard to of fluctuations in value and return. Investments in foreign currency involve the additional risk that a foreign currency might lose value against an investor's reference currency. This document does not reflect all possible risk factors associated with an investment in the aforementioned securities or financial instruments. Historical performance data and financial market scenarios are no guarantee or indicator of current and future performance. The performance data are calculated without taking account of commissions and costs that result from subscriptions and redemptions. Commissions and costs adversely affect performance. Financial transactions should only be carried out after thorough study of the current prospectus and are only valid on the basis of/or/and are subject to the terms given in the most recently published prospectus and annual or semi-annual report. Bellevue Funds (Lux) SICAV is admitted for public distribution in Switzerland. Representative in Switzerland: Waystone Fund Services (Switzerland) SA, Avenue Villamont 17, CH-1005 Lausanne. Paying Agent in Switzerland: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, P.O. Box, CH-8022 Zurich. Bellevue Funds (Lux) SICAV is admitted for public distribution in Austria. Paying and information agent: Zeidler Legal Process Outsourcing Ltd., SouthPoint, Herbert House, Harmony Row, Grand Canal Dock, Dublin 2, Ireland. The Bellevue Funds (Lux) SICAV is admitted for public distribution in Germany. Information agent: Zeidler Legal Process Outsourcing Ltd., SouthPoint, Herbert House, Harmony Row, Grand Canal Dock, Dublin 2, Ireland.  Bellevue Funds (Lux) SICAV is registered in the CNMV registry of foreign collective investment schemes distributed in Spain, under registration number 938. Representative: atl Capital, Calle de Montalbán 9, ES-28014 Madrid. Prospectus, Key Investor Information Document (“KIID”), the articles of association as well as the annual and semi-annual reports of the Bellevue Funds under Luxembourg law are available free of charge from the above mentioned representative, paying, facilities and information agents as well as from Bellevue Asset Management AG, Seestrasse 16, CH-8700 Kusnacht. With respect to fund units distributed in or from Switzerland, the place of performance and jurisdiction is established at the registered office of the representative.



End of Media Release


1542653  25.01.2023 CET/CEST

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