Bellevue Emerging Markets Healthcare

Emerging markets delivered mixed results in July. The Hang Seng Index rose 3.1%, the CSI 300 Index gained 3.7%, and the Korea Composite Stock Price Index (KOSPI) advanced 2.7%. In contrast, the Nifty 50 fell 4.8%, while Brazil’s benchmark index, the Ibovespa, dropped 6.8%. Overall, the broader emerging-market equity market (as measured by the MSCI Emerging Markets Index) ended the month slightly higher, up 2.0%.

The emerging-market healthcare equity sector (+9.8%) outperformed the broader market. Despite ongoing concerns over the most-favored-nation (MFN) pricing model in the US and impending tariffs on biopharma products, the approaching timeline for greater clarity prompted investors to reconsider their positioning in the sector. The Bellevue Emerging Markets Healthcare (Lux) Fund (+12.0%) outperformed its benchmark over the period.

Akeso (+68.1%), Sino Biopharm (+43.0%), WuXi Biologics (+25.5%), Innovent (+25.0%), and BeOne Medicines (+22.7%) were among the top contributors to the fund’s absolute performance. Akeso’s shares have surged since the beginning of the month following reports that AstraZeneca is in talks with Summit to license ivonescimab, a PD-1/VEGF bispecific antibody for the treatment of lung cancer, in a deal valued at up to USD 15 bn and including an upfront payment of several billion dollars. Ivonescimab is Akeso’s flagship asset and is currently in phase 3 clinical trials, led by Summit outside of China. Sino Biopharm has acquired LaNova Medicines, a Chinese biotech company in which it previously held a 5% stake, to further expand its innovative pipeline. LaNova Medicines’ portfolio includes LM-299, a PD-1/VEGF bispecific antibody for the treatment of advanced malignant solid tumors, which was out-licensed to Merck & Co. in 2024. WuXi Biologics’ shares jumped after the preannouncement of its earnings positively surprised investors. The company’s H1 2025 net profit rose 56% yoy, driven by strong revenue growth and margin expansion. Innovent’s IBI363 for the treatment of solid tumors stood out at the 2025 American Society of Clinical Oncology (ASCO) meeting.

PharmaEssentia (-11.4%), Rede D’Or (–10.8%), Divi’s Laboratories (–4.8%), Max Healthcare (–4.3%), and Dr. Reddy’s Laboratories (–2.5%) were the largest detractors from the fund’s absolute performance. PharmaEssentia’s stock fell because investors are unsure how well the company will handle moving from selling shares privately to selling them on the open market. Rede D’Or’s share price came under pressure amid market rumors of a potential merger with Fleury, which the company neither confirmed nor denied. However, the difference in scale and the valuation gap are keeping investors on the sidelines. Divi’s Laboratories, Max Healthcare, and Dr. Reddy’s Laboratories fell in line with the broader weakness in the Indian market, driven by macro headwinds such as India’s power price reform and US-India tariffs threats. All performance figures are in US dollars, with fund performance based on B shares (in US dollars).

Emerging markets include some of the world’s most dynamic growth countries, home to more than half of the world’s population. By 2050, the Asian emerging economies are also expected to account for more than 50% of global economic output. Economies with rising incomes are shifting their growth model away from the industrial sector and toward the service sector. With the growing middle class, demand for modern medicine is rising. Health is increasingly high on people’s wish lists. Billions of dollars in investments in infrastructure, new technologies, and research are driving the modernization of the healthcare system. This gives people broader access to better healthcare. Demand is also on the up due to a rapidly aging population. In China alone, in 30 years, there will be 400 to 500 million people over the age of 60, who will increasingly require modern healthcare services and medications.

In addition to Asia, attractive investment opportunities are increasingly opening up for beneficiaries of Brazil’s rapidly growing private healthcare market. Since the public healthcare system in Brazil is no longer acceptable in terms of quality and waiting times for many well-off Brazilians, they are increasingly turning to the private sector for new services. Hospital chains in their own vertically integrated ecosystem are just one example of the beneficiaries of this sustainable development.

The fund offers defensive access to the above-average growth of emerging markets. We invest in the entire healthcare value chain, from hospital chains, drug and device manufacturers, and research to digital health companies.