Bellevue Emerging Markets Healthcare

Emerging markets gained 9.7% in May, driven by a 26.2% surge in South Korea’s Kospi Index and a 2.9% rise in China’s CSI 300. In contrast, Brazil’s Ibovespa fell 8.6%, India’s Nifty 50 declined 1.6%, and the Hang Seng Index slipped 1.8%.

The emerging-markets healthcare sector fell 2.9% in May, lagging the broader market as investors rotated into information technology stocks, particularly hardware and semiconductors benefiting from the artificial intelligence boom. Sentiment was also weighed down by concerns that US-China biotechnology collaboration and business development could face tighter restrictions. Against this backdrop, the Bellevue Emerging Markets Healthcare Fund gained 0.4%, outperforming its benchmark during the month.

PharmaEssentia (+42.1%), Metis (+40.6%), Legend (+15.5%), Apollo Hospitals (+7.1%), and Cipla (+7.0%) ranked among the fund’s top contributors. PharmaEssentia reported strong results, driven by deeper penetration of Ropeg in polycythemia vera, a rare blood disorder, while an additional indication is expected to launch in the second half of the year. Metis, a recent Hong Kong IPO focused on AI-driven drug delivery vector design, surged after its market debut. Legend delivered strong first-quarter results, supported by continued momentum for its blood cancer therapy Carvykti, while developments in in vivo CAR-T therapies further boosted investor interest. Apollo Hospitals and Cipla benefited from a rotation within the Indian market toward more defensive healthcare stocks.

3SBio (-20.1%), Hansoh (-15.3%), Samsung Biologics (-8.8%), Innovent (-7.4%), and Celltrion (-5.7%) were the largest detractors from absolute performance. Investor sentiment toward Chinese biotechnology companies was weighed down by reports of increased regulatory scrutiny of technology exports and cross-border transactions, including in biotechnology. While such measures are unlikely to materially disrupt US-China biotech collaboration given the sector’s deep integration, concerns over potential restrictions pressured share prices. The impact was most pronounced among leading Chinese biotechnology companies, including 3SBio, Hansoh, and Innovent, which are viewed as having significant business development potential with global pharmaceutical partners. Samsung Biologics and Celltrion declined as investors rotated into South Korea’s semiconductor sector, particularly SK Hynix and Samsung Electronics, weighing on healthcare stocks.

All performance data in USD/B shares.

Emerging markets are home to some of the world’s most dynamic growth economies and account for more than half of the global population. By 2050, Asian emerging economies are expected to generate over 50% of global economic output. As incomes rise, many of these economies are shifting from industry-led growth toward service-driven models. A growing middle class is fueling demand for modern medicine, as health becomes an increasingly important priority. Significant investments in infrastructure, technology, and research are accelerating the modernization of healthcare systems, broadening access to higher-quality care. At the same time, demographic shifts are adding to demand. In 25 years’ time, China alone is expected to have nearly 400 million people over the age of 65, creating a significant need for advanced healthcare services and medicines.

Beyond Asia, attractive investment opportunities are also emerging in Brazil’s rapidly expanding private healthcare market. As the public healthcare system continues to struggle with quality and long waiting times, many affluent Brazilians are increasingly turning to private providers for better services. One notable example of the beneficiaries of this trend can be found in hospital chains, which are building vertically integrated ecosystems to capture sustainable long-term growth.