Market review: June was another tough month for the healthcare space, which lagged the broader market. The lack of newsflow regarding any potential tariffs on pharmaceutical, as well as clarity on new pricing measures continue to weigh on the sector.
As we near the end of the 90-day pause on tariffs announced in April, there is still no definitive guidance on whether pharmaceuticals will be affected. While drugs were initially exempt under the original executive order, the continued threat of additional measures from President Trump has created lingering uncertainty. In addition, there is still little clarity regarding how the «Most-Favored Nation» pricing announced in May should apply, and if that is at all possible. The deadline for CMS to announce its price targets was set for June, but it passed without any announcement. We believe the likelihood of these events is low, but if any of them occur, earnings will be negatively impacted.
On top of this, the administration changes at the FDA are increasingly seeming to be disruptive to the approval process.
In June, two major medical conferences took place, both in Chicago: the American Society of Clinical Oncology annual meeting (ASCO) and the American Diabetes Association Scientific Sessions (ADA). At ASCO, highly expected Phase III data from Summit’s bispecific antibody PD1xVEGF, ivonescimab, demonstrated promising data in progression-free survival (PFS) but disappointed market expectations as the co-primary endpoint of overall survival (OS) was not met. The FDA has a stricter stance regarding approvability, now requiring OS. This is a change from previous approvals in the same setting and may hint at a changing bar for oncology drugs. At ADA, the main highlights were the number of GLP-1 agents coming from China, as well as the potential of amylin and muscle-sparing agents.
Overall, we remain confident despite the headwinds, which we see mostly as noise. Such conditions of market dislocation are supportive for active management, and we stick to our process.

Portfolio changes: No new position was initiated and no position was exited.

Performance review: The largest contributors were Teladoc (+52 bps / two bullish reports released by Citron), BioNTech (+47 bps / BioNTech and Bristol Myers Squibb have signed a collaboration agreement (USD 1.5bn upfront, total potential value up to USD 11.1bn) to co-develop and co-commercialize a bispecific antibody targeting PD-L1 and VEGF) and Hypera (+30 bps / Broker upgrade).
The largest detractors were Exact (-21 bps / Competitor Guardant reported that the National Comprehensive Cancer Network  has added its Shield blood test to the updated colorectal cancer screening guidelines. Throughout June, shares declined amid investor caution ahead of the Supreme Court’s June 27 ruling in Braidwood v. Kennedy. On the day of the decision, the Court ruling overturned lower court decisions that had risked weakening the USPSTF’s authority and potentially increasing patient costs for preventive tools like Exact Sciences’ Cologuard), Hikma (-21 bps / announced a USD 1bn investment by 2030 in the US) and Tandem (-18 bps / Expectation of new competition entering the market).

ESG: Firms in the portfolio did not report any material ESG issues in June.

Market review: May was a turbulent month for the healthcare sector, marked by underperformance and intense policy scrutiny. Managed Care and biopharma were hit hardest, while Medtech, hospitals and drug distributors saw relative resilience. The rotation out of healthcare was driven primarily by escalating policy risks, particularly around drug pricing and Medicaid funding, with investor conversations overwhelmingly focused on these themes.

The biggest headline came on May 12, when President Trump signed an executive order aiming to cut drug prices by “30–80%” through a Most Favored Nation (MFN) pricing model. While the order initially spooked markets, its vague structure and lack of immediate enforcement brought some short-term relief. The US Department of Health & Human Services (HHS) is tasked with negotiating discounts over 30 days, with broader legislative options deferred for up to six months. Biopharma stocks fell on the news, compounded by uncertainty around the US Centers for Medicare & Medicaid Services (CMS)’s draft rules on Medicare drug negotiations.

A surprise FDA leadership change added to volatility, with RFK Jr. naming Vinay Prasad to lead the Center for Biologics Evaluation and Research (CBER), triggering the biotech sector’s largest one-day drop this year.

The month also saw high-profile leadership changes. UNH replaced its CEO after a 50% stock decline since December, Novo Nordisk’s chief stepped down following steep losses, and Intuitive Surgical announced a smooth succession after years of strong performance.

Sentiment stabilized late in the month after Trump delayed a 50% tariff on EU imports to July 9, following a positive call with EU Commission President von der Leyen. While a trade breakthrough remains uncertain, the delay briefly lifted broader risk appetite and boosted consumer confidence.

Overall, May underscored persistent investor anxiety around healthcare policy, with little resolution expected in the near term.

Portfolio changes: No new position was initiated and no position was exited.

Performance review: The largest contributors were Exact (+79 bps / Better than expected sales and EBITDA and guidance was also revised higher. Exact showed an improved commercial execution and Cologuard+ is off to a strong start), Amplifon (+72 bps / Miss on top-line and beat on bottom-line. Positively, management is seeing improvements in the US and other key European markets and confirmed the full-year guidance) and Dexcom (+68 bps / Solid Q1 results and guidance confirmed, driven by strong US. Further, a USD 750mn share buyback was announced).

The largest detractors were Agilon (-98 bps / The stock fell, after providing a lower-than expected EBITDA forecast. The firm was further penalized by political discussions), Ambu (-48 bps / Lower-than-expected FQ2 results, driven by slower endoscopy growth) and Inspire (-43 bps / Reported good Q1 numbers. Later, shares lost after peer Livanova reported solid clinical data and later Apnimed (private company) announced positive phase 3 topline results for their once-daily oral pill for obstructive sleep apnea).

ESG: Firms in the portfolio did not report any material ESG issues in May.

Market review: The key news items this month were the US tariffs. This led to a major sell-off which has mostly recovered since. The healthcare sector underperformed during the month, but this was not only due to tariffs: UnitedHealth, the second largest company in the index, cut guidance due to higher healthcare utilization. While negative for that company, we see it as confirmation of our core view of accelerating healthcare demand. During Q1 earnings, almost all commented on the tariff situation. In general, companies expect revenues to be affected by amounts ranging from 1.3% to less than a tenth of a percent of current-year sales. This is small enough that it can be absorbed by sales growth without impacting guidance. However, this impact only factors in the tariffs which were announced around mid-April, i.e. very high tariffs on Chinese imports as well as 10% tariffs globally until July 1st, with the original, high global tariffs afterwards. Many companies have started to move around inventory and to shift their supply chains to be able to withstand further shocks.

Rumors around plans for pharma-specific tariffs as well as the possibility of introducing MFN pricing remain the biggest overhang for the sector Company executives have been outspoken regarding the negative impact of such policies, which could lead to drastic access issues for patients in the US.

Overall, our confidence in the sector is unchanged, but this example reinforces our commitment to rigorous stock selection.

Portfolio changes: We initiated new positions in GSK and Zai Lab and no position was exited.

Performance review: The largest contributors were Hypera (+89 bps / Q1 results were broadly in line with expectations, although the P&L was significantly impacted by the concentrated execution of the company’s working capital (WC) adjustment plan. This weighed heavily on topline performance and profitability), BioNTech (+45 bps / The Akeso/Summit trial results in China provided a positive read-across to BioNTech, fueling bullish sentiment around PD-1/VEGF bispecifics as a potential new standard-of-care backbone in lung cancer) and Penumbra (+35 bps / Reported better than expected Q1 results).

ESG: Firms in the portfolio did not report any material ESG issues in April.