Bellevue Emerging Markets Healthcare

Emerging markets posted a mixed performance in August. The Hang Seng Index rose +2.1%, the CSI 300 advanced +11.6%, and Brazil’s benchmark index, the Ibovespa, gained +9.4%. By contrast, the Korea Composite Stock Price Index (KOSPI) declined -1.6%, while the Nifty 50 fell -1.9%. Overall, the broader emerging-market equity universe ended the month modestly higher, up +1.3%.

The emerging-market healthcare equity sector (-1.5%) underperformed the broader market. Persistent concerns over the most-favored-nation (MFN) pricing model in the US and looming tariffs on biopharma products kept investors cautious. The Bellevue Emerging Markets Healthcare (LUX) Fund (-0.7%) outperformed its benchmark over the period.

JD Health (+25.7%), Rede D’Or (+24.7%), Sino Biopharm (+9.3%), WuXi Biologics (+3.8%), and BeOne Medicines (+2.3%) were among the top contributors to the fund’s absolute performance. JD Health’s Q2 results beat expectations, and the company raised its full-year guidance. Rede D’Or delivered a reassuring set of Q2 results, with management reaffirming confidence in both the execution of its hospital business and the newly formed health plan joint venture. Sino Biopharm reported results ahead of investor expectations and predicted double-digit revenue and EPS growth in FY 2025. WuXi Biologics released strong H1 results and raised its revenue growth guidance to 14%-16%, up from 12%-15% previously. The company continues to benefit from the surge in out-licensing deals and the growing volume of biological drugs. BeOne Medicines delivered solid results, driven by strong Brukinsa sales in blood cancer treatment.

Legend Biotech (-11.1%), Max Healthcare (-8.0%), Sun Pharma (-7.2%), Celltrion (-6.2%), and Samsung Biologics (-6.0%) were the largest detractors from the fund’s absolute performance. Despite solid results, Legend Biotech saw waning investor interest as the company has few catalysts lined up post-Q2, prompting investors to shift their focus to other outperforming biotech stocks. Max Healthcare delivered mixed results, with strong revenue but weaker margins due to lower-than-expected profitability in newly acquired hospital units. Given investors’ high expectations and the company’s elevated valuation, the results put pressure on the stock price. The stock price of Sun Pharma came under pressure, mainly after the US announced a 50% tariff on India. Celltrion delivered largely in-line Q2 results, recovering from a sluggish Q1 while lowering guidance that had previously been viewed as aggressive. Samsung Biologics has experienced some rotation in investor interest amid the strong momentum of Chinese contract development and manufacturing organization (CDMO) competitors, particularly the WuXi companies.

All performance figures are in USD, with fund performance reported on B shares.

Emerging markets are home to some of the world’s most dynamic growth economies and 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 industrial-led growth toward service-driven models. A growing middle class is fueling demand for modern medicine, as health becomes an increasingly important priority. Massive 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 health services and medicines.

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

The fund provides defensive exposure to the above-average growth potential of emerging markets. Our investments span the entire healthcare value chain, including hospital chains, pharmaceutical and medical device manufacturers, research organizations, and digital health companies.