Bellevue Asia Pacific Healthcare

The MSCI World Index rallied in November and closed 4.6% higher in USD. Once again, Wall Street performed the best, led by tech stocks. Donald Trump’s election victory boosted risk assets across a broad front and also gave the dollar some tailwind. Not very surprisingly, Tesla was the high flyer, gaining almost 40%. Elon Musk was selected to co-head a new advisory commission reporting to the White House, a move that is likely to benefit his company. Outside the US, almost all other stock exchanges came under pressure. Trump’s policies are very likely to stoke inflation in the US. As a result, nominal bond yields climbed considerably higher as US bonds sold off. European and Asian equity markets also headed south. This is mainly because of Trump’s plans to impose blanket tariffs on all imports. Markets in the Asia-Pacific region closed on average about 1.5% lower. Healthcare stocks in this region came under more pressure and closed about 3% lower.

China’s Ministry of Health released its updated National Reimbursement Drug List (NRDL). 91 new drugs were added to the list, including 26 cancer drugs, 15 drugs for diabetes and 13 for orphan diseases. 43 drugs low in efficacy were taken off the list to make room for more innovative treatments. The overall price cut was 63%, which is within the range of the past few years. Once a drug makes it to the list, its price generally doesn’t change much in the ensuing years,  and sometimes prices have actually been raised. It is worth noting that Daiichi Sankyo’s global blockbuster Enhertu was included in the NRDL. The Chinese biotech company Akeso was likewise successful in getting its top product candidate, the bispecific antibody ivonescimab (PD1 and VEGF) on the list. This follows the publication of excellent data from a Phase III trial comparing ivonescimab with Keytruda, the current standard of care in certain cancers, around the middle of this year.

Pro Medicus, an Australian software provider specializing in cloud-based medical imaging solutions and IT/communications systems for hospital radiology departments, announced another contract win. It secured a 10-year AUD 330 mn contract with Trinity Health, which represents the largest contract the company has ever won. Trinity is one of the largest "not-for-profit" hospital chains in the US, operating 93 hospitals in 26 states, and it employs about 650 radiologists.

The fund's position in Peptidream was increased during the past month. Shareholdings of Daiichi Sankyo, Celltrion and Akeso were reduced.   

Asia is the most dynamic growth region in the world and it accounts for more than half of the world's population. Asian emerging markets are forecast to account for more than 50% of global GDP by 2050. As household incomes rise, the economic growth model of Asian countries will shift from manufacturing to the services sector. A growing middle class fuels demand for modern medicine. Healthcare ranks increasingly high on their wish list. Billions are being invested in infrastructure, technology and research to modernize the healthcare systems in emerging market countries. This is giving a greater swath of the population access to better healthcare. Meanwhile rapid population aging is also stoking demand for healthcare. In 30 years’ time there will be 400 to 500 million people over 60 in China alone, and they will have a growing need for modern health services and medicines.

Japan, which has been referred to as “the world's demographic laboratory”, has championed cutting-edge innovation for decades. The Land of the Rising Sun boasts technology leadership in numerous fields, ranging from therapeutic antibody technology, immunotherapy and robotics to digitalization, diagnostics and medical imaging systems. The fund offers defensive access to Asian emerging markets as well as exciting investment opportunities in technology leaders throughout the entire region. It invests in the entire healthcare system value chain, from generic drug producers and biotechnology companies to medical device manufacturers and digital health specialists.