Bellevue Asia Pacific Healthcare

The MSCI World Index lurched 4.4% lower in March in USD. The tariffs the Trump Administration has imposed on various trading partners continue to overshadow the market. Uncertainty regarding the future path of the US economy and inflation has clearly increased even more. Investors have taken profits in tech names as well as in high-flyers within the healthcare sector and reinvested the proceeds elsewhere, particularly in safe havens such as gold or in defensive Swiss stocks, led by Nestlé. Somewhat surprisingly, investors have also shown greater interest in emerging market stocks. Stock markets with historically low valuation multiples are attracting investor capital again. As a result, the MSCI All Countries Asia Pacific Index edged only 1.4% lower despite a weak performance by Japanese stocks. Healthcare stocks in the region performed better, closing 1% lower mom. Announcements of several new cooperation agreements between Chinese and Western healthcare companies and strong quarterly earnings reports gave stocks some support.

Quarterly results reported by CSPC as well as traditional older Chinese drug makers such as Hansoh, Sino Biopharma and Jiangsu Hengrui met or exceeded expectations. Sales of innovative products within their product ranges are growing at faster-than-average rates and steadily increasing their share of total reported sales, which is further grounds for optimism.  This indicates that these drug makers are slowly mastering the tremendously difficult transition from manufacturing just generics to marketing innovative drugs after many difficult years.

Wuxi Biologics and Wuxi Apptec, two leading pharmaceutical services providers, also demonstrated that customers based in the US and Europe continue to place trust in their services despite the currently difficult geopolitical situation.

Innovent, a high-profile representative of China's biotech industry, reiterated its sales target of RMB 20 bn (USD 2.8 bn) for 2027 in its presentation of annual results for 2024. This corresponds to a sales growth rate of more than 30% p.a. for the next three years and comes after Innovent turned a profit for the very first time in 2024, one year earlier than forecast. 

Zailab, JD Health and Ali Health were added to the portfolio during the past month and existing positions in Sino Biopharma and Otsuka were topped up. Shareholdings of Pro Medicus, SHL and Fisher Paykel 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.