2025 has been a year defined by two distinct narratives for the healthcare sector. During the first half of the year, attention was heavily focused on political uncertainty and the presence of unknown factors.

In contrast, the second half of the year has seen a shift in focus toward established Most Favored Nation (MFN) deals and the robust underlying fundamentals of the sector.

The sector sentiment decreased dramatically in H1, suppressing valuations and allocation to record low or near record low levels.

However, the first MFN deal between the Trump administration and Pfizer, marked a significant shift. Further deals have since been announced and more are expected.

As regulatory uncertainties diminish, pharmaceutical giants seem more willing to deploy their substantial cash reserves, and we have seen an increase in M&A activity in recent months.

Despite the challenging first half of 2025 for investors, clinical trials, medical breakthroughs, and new therapies have continued without significant interruption.

Areas where we have seen noteworthy advances include, respiratory diseases, precision medicine in cancer care and obesity.

• Within respiratory diseases, we now have a first approved treatment for severe lung disease bronchiectasis and continue to see remarkable clinical results from new treatments for chronic obstructive pulmonary disease.
• In oncology, diagnostic methods can detect even tiny traces of residual cancer cells and early signs of recurrence. This improves cancer care by enabling better follow-up and earlier treatment decisions to prevent further tumor spread. In addition, novel biomarkers and genetic variations in lung- and breast cancer have helped to better tailor treatment decisions for each patient.
• 2025 also marked a pivotal year for the development of oral obesity therapeutics. The oral drugs are expected to expand patient access and address convenience limitations and are anticipated to capture 20-30 percent of the total obesity market by the end of the decade.

These are just examples of the tremendous levels of innovation seen in the sector which creates a steady stream of new products and companies entering the market which we continue to follow closely.