Bellevue Asia Pacific Healthcare

Asian stock markets posted strong gains in May, with the Nikkei 225 rising +4.4%, the Hang Seng up +4.8%, and the CSI 300 advancing +3.0%. Australia’s benchmark index, the ASX 200, also performed well with a +4.8% increase. As a result, the broader Asia-Pacific equity markets ended the month on a positive note, gaining +4.8%.

The Asia-Pacific healthcare market (+0.7%) underperformed the broader equity market. Negative rhetoric from the US government concerning its Most Favored Nation (MFN) pricing model and impending tariffs on biopharma products weighed on pharmaceutical and biotech stocks, while medtech names provided little support. The Bellevue Asia Pacific Healthcare Fund (+0.2%) slightly underperformed its benchmark.

CSPC (+30.7%), Innovent (+14.0%), M3 (+13.1%), Sino Biopharma (+12.6%), and Daiichi Sankyo (+4.5%) were among the top contributors to the fund’s absolute performance. CSPC gained on management’s guidance for three new business development collaborations in 2025, including one EGFR-ADC for lung cancer and two platform technologies, with a total transaction value exceeding USD 5 bn. Innovent continued its upward trend ahead of the anticipated approval and launch of mazdutide (a GLP-1/GCG dual agonist for weight loss and type 2 diabetes) in China by the first half of 2025. The company also holds strong business development potential with IBI363, a first-in-class PD-1/IL-2 alpha fusion protein targeting melanoma and potentially colorectal cancer. M3 performed well, supported by the defensive nature of its earnings and further boosted by the announcement of a share buyback. Similarly, Sino Biopharma has at least three pipeline candidates with out-licensing potential, which could support a recovery from post-VBP pressures. Daiichi gained momentum heading into ASCO (American Society of Clinical Oncology) with various presentations highlighting their strength in R&D and pipeline.

Legend (-17.2%), Chugai (-8.5%), BeOne Medicines (-5.8%), Terumo (-3.7%), and Takeda (-1.3%) were the largest detractors from the fund’s absolute performance. Legend weakened due to rising competition against Carvykti in multiple myeloma; however, the outlook remains positive, supported by Carvykti's move into earlier-line treatment and improving supply capacity. Chugai declined due to concerns over the MFN pricing model and investor profit-taking following the successful clinical trial of orforglipron, an oral GLP-1 therapy it has licensed to Eli Lilly. BeOne derives the majority of its revenue from Brukinsa, a blood cancer treatment with majority of revenues coming from the US, which weighed on the stock. Terumo reported disappointing quarterly results, with operating profit falling short of investor expectations. The shortfall was primarily due to one-off costs associated with the company’s restructuring efforts. However, growth in Terumo’s blood business and the signing of a new CDMO (contract development and manufacturing organization) contract provided some reassurance. Takeda fell after the company’s FY2025 guidance came in slightly below market expectations.

All performance figures in USD, with fund performance based on the B share (USD).

Asia is the most dynamic growth region in the world and it accounts for more than half of the world's population. Asian emerging markets are forecast to account for more than 50% of global GDP by 2050. As household incomes rise, the economic growth model of Asian countries will shift from manufacturing to the services sector. A growing middle class fuels demand for modern medicine. Healthcare ranks increasingly high on their wish list. Billions are being invested in infrastructure, technology and research to modernize the healthcare systems in emerging market countries. This is giving a greater swath of the population access to better healthcare. Meanwhile rapid population aging is also stoking demand for healthcare. In 30 years’ time there will be 400 to 500 million people over 60 in China alone, and they will have a growing need for modern health services and medicines.

Japan, which has been referred to as “the world's demographic laboratory”, has championed cutting-edge innovation for decades. The Land of the Rising Sun boasts technology leadership in numerous fields, ranging from therapeutic antibody technology, immunotherapy and robotics to digitalization, diagnostics and medical imaging systems.

The fund offers defensive access to Asian emerging markets as well as exciting investment opportunities in technology leaders throughout the entire region. It invests in the entire healthcare system value chain, from generic drug producers and biotechnology companies to medical device manufacturers and digital health specialists.