Bellevue Asia Pacific Healthcare

The MSCI World Index closed about 0.7% lower in February in USD. Mega-cap tech stocks showed big losses for a change. The DeepSeek surprise raised question marks about US market leadership in the field of artificial intelligence – is it as invincible and sustainable as it looks? That uncertainty caused the MSCI World Technology Index to shed more than 5% of its value over the month in USD. The Trump administration's handling of international trade issues, already mentioned in the previous monthly fund review, and the shift in US policy on the war in Ukraine led to higher volatility across international financial markets. Meanwhile the latest economic data indicated that the US economy was losing speed while inflation still remained high. These facts gave non-discretionary consumer stocks and healthcare stocks, both defensive plays that most investors had been avoiding up to now, some tailwind. The latter closed the month more than 1% higher. Year-to-date, healthcare stocks are now up almost 8%. Stocks in the Asia-Pacific region were also in recovery mode last month, gaining almost 0.8%, but healthcare stocks in this region were weak because of the steep markdown of Japanese pharmaceutical and medtech stocks and closed 2.7% lower.

Akeso’s collaboration partner Summit Therapeutics  has entered into a collaboration with Pfizer. Pfizer will evaluate the bispecific antibody ivonescimab (from Summit) in combination with its vedotin ADCs in new Phase I/II studies. These combination studies will focus on solid tumors. This is seen as further validation of Akeso’s promising technology platform. Summit will release the first top-line data from its global Phase III HARMONi study of ivonescimab in lung cancer in mid-2025.

Investors cheered Beigene's strong quarterly results and management guidance was well above the consensus estimates. Its BTK inhibitor Brukinsa is gaining market share in the treatment of chronic lymphocytic leukemia (CLL), the most common type of blood cancer. With sales of about USD 810 mn in the fourth quarter of 2024, Brukinsa claimed 27% of the global market in this indication and an even higher share of 32% in the US. These market share gains are attributed to the drug's significantly better side effect profile. Brukinsa's market share at the end of 2022 was only 7%. The global CLL therapeutics market size is estimated to be more than USD 12 bn. The promising outlook for Brukinsa and Beigene's strong pipeline are major reasons why about 4% of the fund's assets are invested in Beigene.

Celltrion, a South Korean biosimilars manufacturer, reported better-than-expected sales. Non-recurring items led to a drop in its operating margin to 19%, but Celltrion is guiding for a margin of 30% in 2025. Remsima, a biosimilar of Remicade, remains one of Celltrion's key growth drivers. It is expected to gain market share especially with the subcutaneously administered version, which has been approved in the US as a novel drug.

Alteogen and M3 were added to the portfolio last month. Shareholdings of Olympus, Otsuka, Samsung Biologics and Daiichi Sankyo were reduced. Sun Pharma and Shimadzu are no longer in the portfolio.

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 there will be 400 to 500 mn 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.