Bellevue Emerging Markets Healthcare

Emerging-market equities fell 3.1% in July, as steep losses in South Korea’s KOSPI (-16.2%) and China’s CSI 300 (-6.9%) outweighed gains elsewhere. Hong Kong’s Hang Seng Index rose 13.5%, Brazil’s Ibovespa gained 5.3% and India’s Nifty 50 advanced 1.5%.

Emerging-markets healthcare gained 5.1% in July, outperforming the broader market as investors grew increasingly cautious about stretched AI-related technology valuations and the sustainability of capital spending. The Bellevue Emerging Markets Healthcare fund gained 5.5% during the month, outperforming its benchmark.

CSPC Pharmaceutical (+23.1%), Divi's Laboratories (+21.8%), Celltrion (+15.5%), BeOne Medicines (+13.9%) and WuXi Biologics (+12.0%) were among the fund's top contributors during the month. CSPC reported better-than-expected first-half results, mainly driven by an upfront payment from its licensing partnership with AstraZeneca. Divi's Laboratories benefited from rising pharmaceutical manufacturing orders as customers increasingly looked for alternatives to Chinese API suppliers. Celltrion delivered a solid second quarter, supported by strong growth in its newer products, which are key to the company's future growth and margin expansion. BeOne Medicines rebounded from its earlier sell-off, helped by positive Phase III trial data and several analyst upgrades that reinforced confidence in its fundamentals. WuXi Biologics recovered alongside the broader Chinese healthcare sector as investors rotated back into Chinese biotech stocks.

HLB (-36.6%), Legend Biotech (-35.8%), Dr. Reddy’s (-15.7%), PharmaEssentia (-13.4%) and Alteogen (-7.6%) were the fund’s largest detractors from absolute performance during the month. HLB received a third Complete Response Letter from the FDA for its liver cancer drug combination, citing manufacturing issues at a partner facility. The decision means the drug still cannot be marketed in the US. Legend Biotech shares fell after the company announced the resignation of its CEO, raising uncertainty around near-term strategy and pipeline execution. Dr. Reddy’s declined after announcing a delay to the launch of generic semaglutide due to a manufacturing quality issue. PharmaEssentia shares were volatile amid broader swings in Taiwan equities driven by the global semiconductor sell-off, despite continued strong revenue growth. Alteogen was similarly caught up in the sharp, semiconductor-led decline in the Korean market.

All performance data shown in USD, based on B-share class.

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.