Bellevue Asset Management AG

Market commentary of September 24, 2025 By Dr. Terence McManus, Senior Healthcare Portfolio Manager at Bellevue Asset Management The healthcare sector is entering a compelling phase for investors. A proven defensive profile in an unclear macro environment, attractive valuations, near-term policy catalysts, and strong secular growth drivers all align to make this an opportune entry point. Defensive strength in weak macro environments and rate cutting cycles History reinforces healthcare’s role as a defensive allocation. Since 1990, the sector has outperformed in every US recession, delivering a mean 10 percentage points of excess return versus the S&P 500 (see table). Healthcare and particularly biotech have also tended to outperform during Fed cutting cycles. As we enter an increasingly uncertain period, we expect to see strong flows to the value parts of healthcare as hedges to growth exposure in tech. Healing mega caps and an attractive valuation provide the bottom-up support for a rally Alongside the macro and political headwinds, key bellwethers within the sector have had stock-specific issues (e.g. UnitedHealth, Novo Nordisk, Eli Lilly). With improving news flow and more compelling valuations, these have started to recover. Healthcare equities account for <9% of the S&P 500 despite ~18% of US GDP. The sector is trading at a forward earnings multiple near a 10-year low discount relative to broader equities. Pharmaceuticals particularly are already priced for meaningful near-term drug price reform driven EPS downgrades, suggesting ample room for a re-rating once uncertainty clears. Stepping towards a little more policy certainty or desensitization A key overhang has been the US administration’s most-favored-nation (MFN) drug pricing order. President Trump’s August 1 letter set a September 29 deadline for binding commitments, creating a near-term catalyst. Industry has already shown adaptation through direct-pay obesity models and selective European price moves, though full developed-market equalization is unrealistic. Ultimately, Trump seeks a “deal moment” and visible win. With reshoring progress already achieved, a compromise is more likely – potentially via a pilot MFN study or limited application in Medicaid. Such measures would require industry cooperation to deliver results before the mid-term elections. Given complexity, MFN may just be unworkable, but alternative price concessions could still give the administration a win. While multiple scenarios exist, management commentary suggests a deal is likely; absent broad MFN, any compromise could serve as a clearing event and ease investor concerns. In a separate Washington development, ACA subsidy extension is now central to Democrats’ budget negotiations; resolution would support medtech and hospital stocks. Taking a step back, healthcare reforms under Clinton, Bush, and Obama all triggered strong post-uncertainty re-ratings. Innovation should enable investments in care elsewhere Through the political noise, innovation has continued. The use of AI and robotics in healthcare should improve productivity and outcomes for patients. Longer-term, secular growth is anchored by an aging population, rising global demand, and breakthroughs across disease areas. In the present, GLP-1s like semaglutide are reshaping metabolic care, cutting cardiovascular, kidney, and liver disease rates while potentially saving billions. With many patients paying out-of-pocket, the burden on governments is reduced even as health systems benefit. Over time, the savings could be substantial, allowing for improved care in other disease areas. NICE and ICER have already found them cost-effective, not counting wider societal gains. In the near-term, the Evoke trial investigating semaglutide in Alzheimer’s disease could further broaden adoption by creating an “hallo effect” across the class. Healthcare excess return during recessions (S&P 500 vs S&P 500 healthcare) 

Recession	SPXT (broad S&P 500)	Health Care (SPTRHLTH)	Excess HC vs SPX
1990–91 (Jul 1990–Mar 1991)	7.99%	20.44%	12.45%
2001 (Mar–Nov)	-0.9%	6.71%	7.61%
2007–09 (Dec 2007–Jun 2009)	-35.0%	-22.68%	12.33%
2020 (Feb–Apr)	-1.12%	8.35%	9.46%
Mean			10.46%

Source: Bloomberg/Bellevue Asset Management
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Bellevue Asset Management AG, Theaterstrasse 12, 8001 Zurich,
Tanja Chicherio, Tel. +41 44 267 67 07, tch@bellevue.ch, www.bellevue.ch
  Bellevue – Excellence in Specialty Investments
Bellevue is a specialized asset manager listed on the SIX Swiss Exchange with core competencies covering healthcare strategies, entrepreneur strategies, alternative and traditional investment strategies. Established in 1993, Bellevue, a House of Investment Ideas staffed by 90 professionals, generates attractive investment returns and creates value added for clients and shareholders alike. Bellevue managed CHF 4.8 bn in assets as of June 30, 2025.   Disclaimer: This document is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The information and data presented in this document are not to be considered as an offer to buy or sell or an invitation to subscribe any securities or financial instruments. The information, opinions and estimates contained in this document reflect a judgment at the original date of release and are subject to change without notice. Liability for the accuracy or completeness of all information in this document is expressly disclaimed. This information does not take into account the specific or future investment objectives, the financial or tax situation or the particular needs of any specific recipient. This document does not constitute independent investment research. Interested investors should always seek professional advice before making an investment decision. The information in this document is provided without any guarantees or warranties, for information purposes only, and is intended only for the personal use of the recipient. Every investment involves some risk, especially with regard to fluctuations in value and return. Investments in foreign currency involve the additional risk that a foreign currency might lose value against an investor's reference currency. This document does not reflect all possible risk factors associated with an investment in the aforementioned securities or financial instruments. Historical performance data and financial market scenarios are no guarantee or indicator of current and future performance. The performance data are calculated without taking account of commissions and costs that result from subscriptions and redemptions. Commissions and costs adversely affect performance. Financial transactions should only be carried out after thorough study of the current prospectus and only on the basis of the most recently published prospectus and annual or semi-annual report. Bellevue Funds (Lux) SICAV is admitted for public distribution in Switzerland. Representative in Switzerland: Waystone Fund Services (Switzerland) SA, Avenue Villamont 17, CH-1005 Lausanne. Paying agent in Switzerland: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, P.O. Box, CH-8022 Zurich. Bellevue Funds (Lux) SICAV is admitted for public distribution in Austria. Paying and information agent: Zeidler Legal Process Outsourcing Limited, 19-22 Lower Baggot Street, Dublin 2, D02 X658, Ireland. The Bellevue Funds (Lux) SICAV is admitted for public distribution in Germany. Information agent: Zeidler Legal Process Outsourcing Limited, SouthPoint, Herbert House, Harmony Row, Grand Canal Dock, Dublin 2, Ireland. Bellevue Funds (Lux) SICAV is registered in the CNMV registry of foreign collective investment schemes distributed in Spain, under registration number 938. Representative: atl Capital, Calle de Montalbán 9, ES-28014 Madrid. Prospectus, Key Investor Information Document (PRIIP-KIID), the articles of association as well as the annual and semi-annual reports of the Bellevue Funds under Luxembourg law are available free of charge from the above-mentioned representative, paying, facilities and information agents as well as from Bellevue Asset Management AG, Theaterstrasse 12, CH-8001 Zurich. With respect to fund units distributed in or from Switzerland, the place of performance and jurisdiction is established at the registered office of the representative.