Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

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

Performance review: The largest attributors vs. the index were CSL (+32 bps / Not invested), HCA (+16 bps / No company-specific news. Overall strength of hospital providers) and Cigna (+16 bps / No company-specific news. Rebound of services firms following last month’s drawdown).

The largest detractors vs the index were Vertex (-43 bps / Vertex posted better-than-expected Q2 results, though progress in pain was overshadowed by VX-993’s phase 2 miss. Following FDA discussions, a broad PNP label for Journavx appears unlikely, so the company will focus on a new DPN trial to support initial label expansion. While VX-993 did not meet its primary endpoint, Vertex highlighted plans to explore future combination strategies), Abbvie (-32 bps / Not invested) and Johnson & Johnson (-21 bps / Not invested).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest attributors vs. the index were Elevance (+30 bps / Not invested), AstraZeneca (+29 bps / The stock rose on the back of US expansion plans. Later in the month, shares were up after the company reported better than expected Q2 revenues, mostly driven by the company’s key oncology brands) and Bachem (+26 bps / The firm reported a strong H1 and upgraded 2025 guidance).

The largest detractors vs the index were Centene (-70 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), Johnson & Johnson (-51 bps / Not invested) and Cigna (-35 bps / The shares fell over the month following disappointing results from other players in the space. At the end of the month, Cigna reported healthy Q2 results and maintained its outlook; nevertheless, the shares dipped).

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

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 positions were initiated and we exited Lantheus and RadNet.

Performance review: The largest attributors vs. the index were Bachem (+9 bps / two positive broker notes in June), Cigna (+8 bps / No specific news) and ResMed (+7 bps / No specific news).
The largest detractors vs the index were Eli Lilly (-14 bps / Lilly standout at the ADA: 1) orforglipron showed a favourable safety profile, 2) the next generation amylin analog eloralinitide showed promising results with a competitive profile Phase II data is expected to be presented at EASD Vienna and 3) the myostatin inhibitor bimagrumab showed strong data evidencing both muscle preservation and muscle building effects in monotherapy. The stock returned 5.7% in June, and we are underweight versus the reference index), AstraZeneca (-13 bps / News has emerged that RFK Jr. is exploring ways to tighten regulations on pharmaceutical advertising) and Zoetis (-9 bps / The European Medicines Agency’s Committee for Medicinal Products for Veterinary Use (CVMP) issued positive opinions recommending marketing authorization for Zenrelia (Elanco) and Numelvi (Merck), both JAK inhibitors indicated for treating atopic dermatitis in dogs. Later, a broker downgraded Zoetis).

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

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest contributors were NewAmsterdam (+22 bps / Strong data on Alzheimer biomarker prevention), Sandoz (+19 bps / No company-specific news. Swiss pharmaceutical stocks rose following a Bloomberg report suggesting that a potential US-Switzerland trade deal may include a provision granting Switzerland preferential treatment in ongoing national security investigations, potentially shielding its pharmaceutical exports from tariffs) and ResMed (+18 bps / The company was upgraded by a broker).

The largest detractors were Centene (-168 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), NovoNordisk (-106 bps / The company reported preliminary Q2 results that were almost in-line with expectations but lowered its sales and operating profit outlook for 2025 due to slower-than-expected growth in the US obesity and diabetes drugs) and Amplifon (-92 bps / The firm missed market expectations on top-and bottom-line and lowered its 2025 outlook).

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

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: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest contributors were NewAmsterdam (+22 bps / Strong data on Alzheimer biomarker prevention), Sandoz (+19 bps / No company-specific news. Swiss pharmaceutical stocks rose following a Bloomberg report suggesting that a potential US-Switzerland trade deal may include a provision granting Switzerland preferential treatment in ongoing national security investigations, potentially shielding its pharmaceutical exports from tariffs) and ResMed (+18 bps / The company was upgraded by a broker).

The largest detractors were Centene (-168 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), NovoNordisk (-106 bps / The company reported preliminary Q2 results that were almost in-line with expectations but lowered its sales and operating profit outlook for 2025 due to slower-than-expected growth in the US obesity and diabetes drugs) and Amplifon (-92 bps / The firm missed market expectations on top-and bottom-line and lowered its 2025 outlook).

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

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: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest contributors were NewAmsterdam (+22 bps / Strong data on Alzheimer biomarker prevention), Sandoz (+19 bps / No company-specific news. Swiss pharmaceutical stocks rose following a Bloomberg report suggesting that a potential US-Switzerland trade deal may include a provision granting Switzerland preferential treatment in ongoing national security investigations, potentially shielding its pharmaceutical exports from tariffs) and ResMed (+18 bps / The company was upgraded by a broker).

The largest detractors were Centene (-168 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), NovoNordisk (-106 bps / The company reported preliminary Q2 results that were almost in-line with expectations but lowered its sales and operating profit outlook for 2025 due to slower-than-expected growth in the US obesity and diabetes drugs) and Amplifon (-92 bps / The firm missed market expectations on top-and bottom-line and lowered its 2025 outlook).

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

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: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Please change me...

Please change me...

Market review: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest contributors were NewAmsterdam (+22 bps / Strong data on Alzheimer biomarker prevention), Sandoz (+19 bps / No company-specific news. Swiss pharmaceutical stocks rose following a Bloomberg report suggesting that a potential US-Switzerland trade deal may include a provision granting Switzerland preferential treatment in ongoing national security investigations, potentially shielding its pharmaceutical exports from tariffs) and ResMed (+18 bps / The company was upgraded by a broker).

The largest detractors were Centene (-168 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), NovoNordisk (-106 bps / The company reported preliminary Q2 results that were almost in-line with expectations but lowered its sales and operating profit outlook for 2025 due to slower-than-expected growth in the US obesity and diabetes drugs) and Amplifon (-92 bps / The firm missed market expectations on top-and bottom-line and lowered its 2025 outlook).

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

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: August marks the strongest month for the sector since January, with the MSCI World healthcare outperforming the broad market by 2.5%. This performance was driven by a strong rebound in the services sector following last month’s drawdown. Biopharma companies also performed well, with large caps driven by relief on incremental clarity on pricing (more below), and small caps reacting to increasingly dovish rate expectations.

Some clarity on tariffs: This month, the European Commission and the White house issued a joint trade statement between the EU and the US. The joint statement set a ceiling of 15% for tariffs across all EU products exported to the US. This ceiling will apply to pharmaceuticals, regardless of the outcome of the ongoing 232 investigation. This investigation assess the effect of imports on US national security, as was previously deemed to be a major overhang. In addition, generics will be tariffed at the previously implemented most-favoured nation level, which is close to zero. Switzerland currently faces 39% tariffs on many exports since the beginning of the month. However, pharmaceuticals currently remain exempted from these tariffs. While there is a lot of policy volatility in the US, this gives some clarity for the many international companies producing in the EU for the US market and sets a potential benchmark for future negotiations. Separately, a letter was sent by the Trump administration to pharmaceutical companies regarding drug pricing. A lot of uncertainty remains on this matter, however the absence of details or binding constraints triggered relief in the pharmaceutical sector.
Close of the earnings season: Second quarter reporting is now over, with results overall quite strong of the sector.

Sales and EPS growth close to 10% and overall robust earnings surprises continue to bolster our confidence in the sector’s healthy fundamentals. This quarter once again saw very large swings following earnings report for several companies. This highlights the information asymmetries and opportunities for value creation with active management within the sector.

Performance review: The largest contributors were RadNet (+115 bps / Reported better than expected Q2 results and raised full-year outlook), Humana (+86 bps / No company-specific news. Rebound of services firms following last month’s drawdown) and Natera (+80 bps / Sales came in above estimates (driven by Signatera) and raised the 2025 sales and gross margin outlook).

The largest detractors were Inspire (-85 bps / Despite stronger-than-expected Q2 results, the 2025 outlook was significantly lowered as the Inspire 5 rollout proved more complex than anticipated, and some patients may be delaying V therapy while considering GLP-1 treatments), Tandem (-60 bps / Q2 results showed a sales beat but an EPS miss, with shares selling off after US expectations were cut due to rising competition) and Agilon (-31 bps / 2Q results came in below expectations. In addition, Agilon announced a CEO transition and withdrew FY25 guidance).

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

Market review: July was packed with news on the healthcare side, not all of them positive. The sector was under pressure, ending the month 4.3% behind the broad market.

More managed Care mayhem: Early in July, Centene withdrew its 2025 guidance ahead of the second quarter earnings later this month. Fundamentally, this was driven by higher-than-expected morbidity in the markets where Centene is present. This follows the UnitedHealth episode in May, where the company also suspended guidance due to which was in part due to higher-than-expected utilization. UnitedHealth was also under pressure in July, as the reinstated guidance for 2025 was lower than expected. Overall, this continues to paint a challenging picture for the group as headwinds persist.

For pharma, while some countries reached trade deals with the US, pharmaceuticals are not always included. Late in July, a letter sent by President Trump to major pharmaceutical companies asks for voluntary actions to reduce prices across government channels, with threats of retaliation. The letter refers to trade policy to support increasing drug prices abroad and encourages direct sales to patients. On this point, Novo Nordisk has shown this month the disruption potential of this tactic, issuing a profit warning due to continued competition from compounders. Overall, this letter provides little beyond sustaining this overhang for the group.

Further, in a symptom of the agitation ongoing at the FDA, Dr Vinay Prasad has resigned as head of the biologics division only 3 months after taking office.

Overall, macro continues to drive the sector despite solid Q2 earnings being reported season which is currently ongoing.

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

Performance review: The largest contributors were NewAmsterdam (+22 bps / Strong data on Alzheimer biomarker prevention), Sandoz (+19 bps / No company-specific news. Swiss pharmaceutical stocks rose following a Bloomberg report suggesting that a potential US-Switzerland trade deal may include a provision granting Switzerland preferential treatment in ongoing national security investigations, potentially shielding its pharmaceutical exports from tariffs) and ResMed (+18 bps / The company was upgraded by a broker).

The largest detractors were Centene (-168 bps / The shares dipped after the company withdrew its 2025 guidance, due to pressure in its HIX business and an acceleration in Medicaid cost trend), NovoNordisk (-106 bps / The company reported preliminary Q2 results that were almost in-line with expectations but lowered its sales and operating profit outlook for 2025 due to slower-than-expected growth in the US obesity and diabetes drugs) and Amplifon (-92 bps / The firm missed market expectations on top-and bottom-line and lowered its 2025 outlook).

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

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.