Healthcare stocks experience highs and lows that are very close to each other. While 2023 was the worst year since 1999 in terms of relative performance, the sector is among the best this year, up around 18% as measured by the MSCI World Health Care Index (in USD). It is also worth noting that European healthcare companies on average performed better than their US counterparts.
Many European companies are developing interesting projects. Among the stocks that have performed the best since the start of the year are the biopharmaceutical company UCB and the Swiss drug manufacturing group Lonza, which notably has significant capabilities in biological drugs. The Anglo-Swedish pharmaceutical company AstraZeneca has also had a very good run this year and still looks very promising, particularly with regard to its oncology portfolio.
Alzheimer’s disease – a promising market
One of the next big markets will likely be the treatment of neurological diseases. In the United States, two drugs are already on the market for the treatment of Alzheimer’s disease. Although their effectiveness is not revolutionary, these drugs offer patients a treatment option for which previously only symptomatic treatment existed. There is therefore a huge unmet need for this devastating disease. And we think there will be even more, because the industry is focusing a lot on this area and investing heavily in it. Over the next few years or decade, there may be treatment opportunities for many other neurological diseases, covering the full spectrum of unmet medical needs for neurological diseases such as Alzheimer’s disease, psychoses, Parkinson’s disease and depression.
Swiss pharmaceutical giant Roche is currently enjoying a renaissance thanks to its mix of low valuation and promising product portfolio. One example is the development of an Alzheimer’s disease drug based on Brain-Shuttle technology, which could overcome some of the problems associated with drug transmission across the blood-brain barrier encountered with conventional medications. similar ones already authorized in the United States. This barrier between the bloodstream and the central nervous system protects the brain against harmful substances – but also against large molecule drugs such as antibodies. In addition, Roche wants to accelerate the development of its drug candidates against diabetes and obesity, and thus has the potential to serve one of the most attractive pharmaceutical markets at the moment.
Diabetes – the most attractive biopharmaceutical market today
Novo Nordisk and Eliy Lilly dominate the diabetes and obesity drug market with their popular drugs Ozempic, Wegovy, Mounjaro and Zepbound. Eli Lilly significantly exceeded expectations for the second quarter, while Novo Nordisk had a rather mixed quarter, but still delivered very impressive growth numbers. The stock market pushed Eli Lilly’s share price up about 20%, while Novo Nordisk lagged behind. However, we do not think that much change will happen for the Danish industry leader, as there is no doubt that demand for these weight loss drugs will outstrip supply in the coming quarters and perhaps even for the next few years.
Treating pain without opioids
As the global leader in cystic fibrosis drugs, US company Vertex Pharmaceuticals serves a lucrative market. In its promising program, it currently offers a medication for the treatment of pain that does not contain opioids and is therefore not addictive. It is currently going through the last phase before authorization. We believe this could be a big opportunity for the company, given that opioid addiction is a major problem in the United States today and the average life expectancy has decreased by approximately five years due to overuse of opioids.
