Bellevue AI Health

The US labor market data for September, published in November, showed a mixed picture. Although more jobs were created than expected, the unemployment rate came in above expectations while wage growth fell short. Consumer sentiment also weakened significantly. As a result, the likelihood of another interest rate cut by the US Federal Reserve in December increased.

The MSCI World and the S&P 500 each gained 0.3% in November, while the Nasdaq 100 declined by 1.6%. The healthcare sector once again delivered a strong performance, rising by a substantial 8.1%. Pharma, biotech and medtech stocks were the main drivers. Additional momentum came from an agreement between Eli Lilly and Novo Nordisk and the US government, which expands access to obesity medications through a targeted pricing strategy. The Bellevue AI Health Fund advanced 7.7% but did not outperform its benchmark.

Biopharma (end weight 55.3%) contributed 6.4% to absolute performance but detracted slightly from relative performance (-0.2%). The strongest contributors were Eli Lilly (+24.8%), Merck & Co (+21.9%) and Johnson & Johnson (+10.2%), while Recursion Pharmaceuticals (-16.1%), Zoetis (-11.0%) and Sanofi (-1.4%) weighed on performance. Eli Lilly reached an agreement with the US government that will expand access to obesity drugs for Medicare and Medicaid beneficiaries through a targeted pricing strategy. Merck strengthened its pipeline with the USD 9.2 bn acquisition of Cidara Therapeutics, adding CD388, whose Phase III results are expected from June 2026, and presented data on its oral PCSK9 inhibitor enlicitide, which could become a multibillion-dollar opportunity in cholesterol lowering starting in 2026.

The medtech segment (28.0%) contributed 1.1% to absolute performance but detracted -0.2% in relative terms. Medtronic (+16.1%), Intuitive Surgical (+7.3%) and Thermo Fisher (+4.1%) made the strongest positive contributions, while Siemens Healthineers (-10.9%), Hoya (-7.8%) and EssilorLuxottica (-2.0%) detracted. Medtronic reported stronger-than-expected revenue growth, supported by robust demand for its latest-generation pulsed-field ablation catheters. Siemens Healthineers, however, disappointed investors with its third-quarter report and its nvestor day, falling short of high expectations.

Healthcare services companies (11.0%) contributed 1.0% to absolute performance and 0.6% to relative performance. BillionToOne (+117.0%), HCA Healthcare (+10.6%) and McKesson (+8.6%) made positive contributions, while Omada Health (-23.8%) and UnitedHealth (-3.5%) had a slightly negative impact. BillionToOne, whose IPO we participated in during November, uses its AI-based Quantitative Counting Template (QCT) core technology in prenatal diagnostics and liquid biopsy for cancer detection and monitoring. Omada Health exceeded high expectations but referred to 2026 as an investment year, which raised concerns among investors regarding profitability.

The technology segment (4.0%), which comprises companies from the healthcare and information technology industries, detracted -0.5% from both absolute and relative performance. Waystar (+3.0%) contributed slightly positively, while Oracle (-23.1%), Veeva Systems (-17.5%) and Nvidia (-12.6%) declined meaningfully. Veeva exceeded quarterly expectations and raised its full-year guidance but closed fewer CRM contracts to large pharmaceutical companies than anticipated. Oracle and Nvidia corrected as investors grew increasingly skeptical about the sustainability of investments in AI infrastructure.

All performance data in USD / B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technology-driven transformation that ranks right next to other key milestones such as the Internet, cloud computing, and smartphones. GenAI is creating tremendous opportunities for businesses and investors, especially in the healthcare sector. According to a number of studies, the healthcare sector will be one of the industries that will benefit the most from the deployment of GenAI. This forecast is mainly based on the vast potential for efficiency gains in healthcare systems, on the large, readily available amounts of data in healthcare systems, and on the considerable financial resources available for healthcare needs.

Medications are already being developed more quickly and with better rates of success, new diagnostic and treatment methods are producing better clinical outcomes, and GenAI is helping medical professionals make better and more informed decisions. We focus on healthcare companies that have made GenAI a core element of their business strategy and that are investing substantial resources in this technology to gain a lasting competitive advantage and deliver superior growth. The technology risk here is more calculable than in other industries because healthcare is such a heavily regulated industry.