Bellevue Healthcare Strategy (CH)

Global equities rose in October 2025 (MSCI World Index; +2.0%), with healthcare outperforming (MSCI World Health Care Index; +3.1%) as visibility on the future pharmaceutical operating environment improved and Q3 results delivered. The Bellevue Healthcare Strategy (CH) Fund (I shares) underperformed its benchmark by 316 bps in USD, driven by its underexposure to the US region.

On September 30, Pfizer became the first major pharmaceutical company to reach an agreement with the US administration on drug pricing and domestic investment, establishing a new framework for negotiated pricing and manufacturing commitments. This was followed by AstraZeneca on October 10 and Merck KGaA on October 16, both signing similar arrangements under the administration’s evolving «most-favored-nation» and «TrumpRx» initiatives. While still at an early stage, these agreements have played a meaningful role in shifting market sentiment – from one of maximum policy uncertainty to a more balanced outlook in which investors are increasingly comfortable with the likely medium-term operating environment for the global pharmaceutical industry.

After a strong month of M&A in September (Metsera, 89bio, and Merus), the trend continued in October. Novartis agreed to acquire Avidity Biosciences for USD 12 bn, expanding its RNA-therapeutics pipeline via Avidity’s AOC neuromuscular platform. Novo Nordisk continued its metabolic expansion by purchasing Akero Therapeutics for USD 5.2 bn, adding a late-stage MASH (fatty liver) asset. Meanwhile, Thermo Fisher Scientific announced plans to buy Clario, a clinical-trial data and software provider, for up to USD 9.4 bn to strengthen its drug-development services.

In October 2025, global healthcare markets saw a strong Q3 earnings season marked by beats and upgraded outlooks across subsectors. Eli Lilly, Galderma, and Intuitive Surgical were standout performers in our view, beating expectations and raising guidance. Altogether, the month was defined by solid earnings, active deal flow, and continued innovation across the healthcare complex.

Among portfolio holdings, Samsung Biologics (strong Q3 results; +21%), Intuitive Surgical (strong results and procedure-growth outlook raised; +19%), and Hoya (progress in advanced chip manufacturing; +17%) delivered the strongest absolute performance for the month.

Healthcare equities remain under-indexed at <9% of the S&P 500 versus ~18% of US GDP and are still trading at near-decade-low relative multiples. Pharmaceutical valuations reflect EPS downgrades tied to drug-pricing reform, which looks increasingly unlikely to come. After several difficult years of headwinds, we are increasingly confident that the sector is healing.

Along with discounted valuations and improving certainty around the operating environment, the macro backdrop could move toward a supportive phase for healthcare. The sector, and biotech in particular, has also tended to benefit during Fed cutting cycles. In addition, the sector has historically proven to be a good hedge in slowdowns, outperforming in every US recession since 1990 with an average 10-point excess return versus the S&P 500.

Long-term structural growth drivers remain intact, including aging populations, expanding access in emerging markets, and innovation in areas like robotics and AI. Importantly, innovation is central to addressing rising societal costs through efficiency gains and reduced long-term care burdens. Against this backdrop, the fund maintains a selective, high-conviction strategy with diversified global exposure to healthcare.