Bellevue Asset Management AG
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Media release of August 10, 2023 Healthcare – a buying opportunity for contrarian investors 2023 has been a disappointing year for investors in healthcare equities. The MSCI World Healthcare Index, the bellwether equity index for the healthcare industry, is hardly any higher now than it was at the beginning of the year. Meanwhile the S&P 500 has gained 17% year-to-date. Although that gain has largely been fueled by the sizzling performance of seven giant tech stocks, it can't be denied that most investors are sticking to the sidelines when it comes investing in the healthcare space. We believe there are two reasons why so many investors have decided to stay away from healthcare stocks: Central-bank rate hikes in response to rampant inflation have had the greatest impact on the valuations of companies that are not yet generating a steady flow of income and that are dependent on external financing to stay in business. These are often biotechnology companies and firms that are developing tech-related applications such as sensors or measuring devices for digital health solutions. Mega caps in the pharmaceutical space, true to their defensive reputation, have been affected less by the aforementioned developments. The other reason is psychological in nature. The big breakthrough that was achieved with the development of COVID-19 vaccines increased public awareness of how a new therapeutic approach can play a critical role in overcoming problems that affect society as a whole. The flip side of the coin is that as the coronavirus pandemic faded in the rear-view mirror, investors turned away from the sector in droves. Artificial intelligence is a theme that has attracted plenty of interest from investors lately. AI also happens to be an increasingly important tool in drug discovery and development processes, and in the medical technology industry. The healthcare sector’s increasingly impressive innovation power has attracted far fewer headlines, but it is equal in significance. This is evident, for example, in drug development processes. In the United States, which remains the world's largest market for healthcare, there have been 29 new drug approvals so far this year to the beginning of August. The chances are good, then, that more than 40 novel drugs will be granted marketing approval from the FDA in 2023, as in most years. Recent developments in the therapeutic areas of diabetes, cancer and Alzheimer's are particularly promising. Alarming increase in the number of people with diabetes Obesity is one of the main causes of diabetes. 13% of the US population had a body mass index of more than 30 in 1980. By 2020, this percentage had risen to 42%. On the medicine front, we are currently witnessing some very exciting developments. First and foremost, Novo Nordisk and Eli Lilly have developed medicines that – in simple terms – reduce feelings of hunger and help patients lose 15% to 20% of their body weight after a few months of treatment. The market potential is correspondingly huge – global sales in 2030 are expected to total USD 44 bn. Taking the fight against cancer to a new level Encouraging developments in Alzheimer's research Healthcare stocks attractively valued
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1699963 10.08.2023 CET/CEST