HERE<\/a>.<\/p>\n\u00a0<\/p>\n
Key Takeaways<\/p>\n
\n\tHealthcare is the worst-performing GICS sector year-to-date, down roughly four per cent in dollar terms, yet underlying earnings quality and revenue growth across most sub-sectors remain intact.
\n\tThe sector trades at approximately 17 times forward earnings versus 21 times for the S&P 500, a discount well below the long-term average and one that Bellevue views as a compelling entry point.
\n\tPolitical headwinds, most notably the US drug-pricing agreement under the Trump administration, are largely in the rearview mirror, removing a key overhang that had deterred new capital.
\n\tBiopharma mergers and acquisitions (M&A) activity is accelerating, with the 20 largest pharma companies holding more than USD1 trillion in combined financial firepower to address looming patent cliffs.
\n\tInnovation in medtech, from robotic surgery to transcatheter heart valves to continuous glucose monitoring, is creating new blockbuster markets with durable growth profiles.
\n\tArtificial intelligence (AI) is emerging as a cost and efficiency lever across drug development, clinical trials and surgical systems, rather than a disruptive threat to the sector.
<\/p>\n
\u00a0<\/p>\n
A Sector Out of Favour but Not Out of Form<\/p>\n
Healthcare’s underperformance has been a persistent theme for the past two years, driven by a combination of political uncertainty in the United States, rising interest rates and the gravitational pull of capital towards AI and technology stocks. Marcel Fritsch, Head of Healthcare Funds and Mandates and Portfolio Manager at Bellevue Asset Management, acknowledged the challenge directly. “The healthcare sector has been quite difficult in terms of performance over the last couple of years,” he said. “It’s been exacerbated by political uncertainty in the US and the immense flows going into AI and tech.”<\/p>\n
The sentiment in the room echoed this assessment. One investment director at a Hong Kong-based multi-family office said his firm was turning to healthcare “because we think it’s a more defensive sector right now, and the market is a little bit top-ish, so we are looking at this sector for diversification of our portfolios.” A head of investment at another multi-family office added that the sector was “under-owned and has underperformed for quite a while,” expressing hope that “the tide will turn soon.” One external asset manager partner framed it in risk management terms: “It’s an opportune time for us to diversify in a barbell strategy because the market has been very much concentrated and skewed towards AI-related sectors.”<\/p>\n
Yet beneath the headline weakness, the picture is markedly different. Fritsch pointed to a healthcare sector where fundamentals remain in good shape across multiple sub-sectors, even as share prices have failed to reflect this. Pharma and large-cap biotech have stabilised following the resolution of the most-favoured-nation pricing dispute with the US government late last year, a deal that effectively removed the single largest political overhang on the sector. Small and mid-cap biotech names have performed well on the back of strong clinical results and a surge in acquisition activity from large pharma companies seeking to replenish depleted pipelines.<\/p>\n
Healthcare providers, particularly US health insurance companies, have endured a difficult stretch as medical costs surged among the elderly population. But first-quarter 2026 results marked what Fritsch described as a turning point. “What we have seen in the first quarter results of these companies is probably the most positive thing we have seen over the last two to two and a half years,” he said. “They finally showed that the premiums are obviously high enough to absorb the underlying medical cost.”<\/p>\n
Medtech, by contrast, remains under pressure, trading down 16 per cent year-to-date in dollar terms. Fritsch attributed this largely to uncertainty around the US government’s decision not to extend Affordable Care Act subsidies for 2026, raising concerns that underlying procedure growth may not hold up. Life science tools companies are still recovering from post-pandemic demand normalisation, delivering only low single-digit organic revenue growth as they work back towards the high single-digit trajectory that characterised the pre-Covid era.<\/p>\n
The Valuation Case<\/p>\n
The numbers paint a striking picture. According to Bellevue’s analysis, the MSCI World Healthcare Index trades at roughly 17 times next-12-month earnings, compared with approximately 21 times for the S&P 500. On a relative basis, healthcare’s price-to-earnings (P\/E) ratio stands at 0.82 times the broader market, well below the 10-year average of 0.90. “There is an opportunity because the whole thing is undervalued and under-owned,” Fritsch said, adding that the capital now concentrated in technology and AI had to come from somewhere, and healthcare was among the sectors that funded that rotation.<\/p>\n
Within medtech specifically, the valuation dislocation is even more pronounced. The sub-sector historically traded at 24 to 25 times earnings and has compressed to around 18 times, despite delivering six to nine per cent organic revenue growth and low double-digit earnings-per-share growth. “If you take a look at the valuation and the fundamental data, for me that looks quite promising,” Fritsch said, “but it needs a couple of catalysts for the multiples to go up again.”<\/p>\n
Diya Lowe, Head of Distribution for Asia Pacific at Bellevue Asset Management, reinforced the broader opportunity. “The fundamentals of these companies are still very good and we’re very excited at valuations being as attractive as they are, because it’s giving investors a chance to build healthcare exposure at extremely attractive levels,” she said.<\/p>\n
Innovation as the Growth Engine<\/p>\n
While valuations provide the entry point, innovation underpins the long-term thesis. Fritsch walked attendees through several areas where new products and treatment modalities are creating entirely new revenue pools. In cardiovascular medicine, lipoprotein(a), or Lp(a), represents what Bellevue considers one of the largest untapped opportunities. Roughly one in five people carry elevated levels of this genetically determined cholesterol variant, which cannot be managed through diet or exercise and for which no approved therapy currently exists. Several companies, including Novartis and Amgen, have candidates in late-stage trials, with Phase 3 data expected in the course of 2026.<\/p>\n
“We believe it’s a multi-billion US dollar market,” Fritsch said, explaining that the team had conducted extensive diligence. “We conducted to 40 different expert calls to really make sure that scientifically this makes sense.”<\/p>\n
In medtech, robotic surgery continues its structural advance. Intuitive Surgical’s Da Vinci 5 system, which boasts 10,000 times the computing power of its predecessor, now incorporates AI-driven features including simulated surgical training, tissue pressure sensing and performance analytics. “Surgeons used to train with chickens,” Fritsch observed. “Nowadays with the Da Vinci 5 system, they train with the system itself, because by using generative AI you can create an operating setting which is exactly the same as operating in the body.” The broader medtech landscape offers significant market expansion. Bellevue’s roadshow materials project the continuous glucose monitoring market growing from USD11.7 billion in 2024 to USD21.3 billion by 2029, while soft-tissue surgical robotics is expected to more than double from USD8.7 billion to USD19.1 billion over the same period.<\/p>\n
AI as Enabler, Not Disruptor<\/p>\n
A recurring theme at the roundtable was the role of AI within healthcare. Fritsch was clear that AI functions primarily as an efficiency tool rather than a force that will upend the sector’s economics. In pharma and biotech, AI is being deployed to accelerate drug development, improve patient selection for clinical trials and predict toxicity profiles earlier in the process, with estimates suggesting potential savings of USD70 billion in drug development costs by 2028 and 40 to 70 per cent reductions in preclinical timelines.<\/p>\n
For health insurance companies, AI enables automation of invoice processing and contract management at scale. In medtech, heavy regulatory requirements around clinical data and device approvals create natural barriers that protect hardware-based businesses from software disruption. “Healthcare is heavily regulated,” Fritsch noted. “And these companies also use AI to develop their software further. They have a head start.”<\/p>\n
One senior investment professional from a global asset manager noted that his firm had “started looking into the healthcare sector more seriously because of the AI involvement with the healthcare industry,” adding that he saw “quite a good opportunity there.”<\/p>\n
M&A as a Structural Imperative<\/p>\n
Patent expirations loom large over big pharma, with hundreds of billions of dollars in revenue at risk over the next four to six years. Fritsch described M&A as an imperative rather than an option. “They will lose, if they do nothing, a couple of hundred billion dollars in revenues,” he said.<\/p>\n
The firepower is available. According to Bellevue’s analysis, the 20 largest biopharma companies collectively hold more than USD1 trillion in combined cash and additional debt capacity. Major transactions in 2025 and early 2026 underscore that the cycle is well underway, with medtech M&A also accelerating through deals such as Boston Scientific’s USD14.4 billion acquisition of Penumbra and Danaher’s USD9.7 billion purchase of Masimo.<\/p>\n
Building the Case for Allocation<\/p>\n
For the wealth managers and family office professionals gathered at the roundtable, the discussion surfaced a common thread: healthcare remains structurally underweight in most portfolios, even as the sector’s defensive qualities and innovation-driven growth make it an increasingly logical complement to concentrated technology positions. As one multi-family office representative at the event put it: “Healthcare is one of the best sectors for our generation because of the domain expertise required.”<\/p>\n
“We don’t know when, but we do think the turn will come,” said Lowe. “Six months ago, filling a room like this to talk about healthcare was much harder. The fact is people are looking at their portfolios, they are looking at their tech and AI exposure, and are looking for more defensive places to invest in.”<\/p>\n
Bellevue, which manages in excess of USD6 billion predominantly in publicly listed healthcare equities and employs around 20 investment professionals with backgrounds spanning natural sciences and finance, positions itself as a specialist partner for investors seeking differentiated healthcare exposure. With vehicles covering broad healthcare, medtech and services, and emerging markets healthcare, the firm is making the case that the current dislocation represents a window that disciplined allocators would do well not to ignore.<\/p>\n","protected":false},"excerpt":{"rendered":"With healthcare equities trading at their steepest discount to the broader market in over a decade, Bellevue Asset…\n","protected":false},"author":2,"featured_media":714315,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[173438,173442,173450,173446,173437,173441,173449,173445,173439,173443,173451,173447,173436,173440,173448,173444,45,49,48,15954,133,131,132,9210],"class_list":["post-714314","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-asia-private-banking","tag-asia-private-banking-news","tag-asia-private-banking-online-training","tag-asia-private-banking-training","tag-asia-wealth-management","tag-asia-wealth-management-news","tag-asia-wealth-management-online-training","tag-asia-wealth-management-training","tag-asian-private-banking","tag-asian-private-banking-news","tag-asian-private-banking-online-training","tag-asian-private-banking-training","tag-asian-wealth-management","tag-asian-wealth-management-news","tag-asian-wealth-management-online-training","tag-asian-wealth-management-training","tag-business","tag-ca","tag-canada","tag-e-learning","tag-finance","tag-personal-finance","tag-personalfinance","tag-training"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/714314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=714314"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/714314\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/714315"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=714314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=714314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=714314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}