REG-Worldwide Healthcare Trust PLC: Half-year Financial Report
13/11/2025 07:02
LONDON STOCK EXCHANGE ANNOUNCEMENT
Worldwide Healthcare Trust PLC
Unaudited Half Year Results for the six months ended
30 September 2025
This Announcement is not the Company’s Half Year Report & Accounts. It is an
abridged version of the Company’s full Half Year Report & Accounts for the
six months ended 30 September 2025. The full Half Year Report & Accounts,
together with a copy of this announcement, will also shortly be available on
the Company’s website: www.worldwidewh.com
where up to date information on the Company,
including daily NAV, share prices and fact sheets, can also be found.
The Company's Half Year Report & Accounts for the six months ended 30
September 2025 has been submitted to the UK Listing Authority, and will
shortly be available for inspection on the National Storage Mechanism (NSM):
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact: Mark Pope, Frostrow Capital LLP 0203
008 4913.
Performance
Six months to One year to
30 September 31 March
2025 2025
Net asset value per share (total return)* # +5.0% -10.3%
Share price (total return)* # +10.9% -10.5%
Benchmark (total return)^ # -5.3% -3.2%
30 September 31 March Six months
2025 2025 change
Net asset value per share 354.4p 339.5p +4.4%
Share price 328.0p 297.5p +10.3%
Discount of share price to the net asset value per share (7.4)% (12.4)%
Leverage 1 16.4% 12.0%
Ongoing charges* 0.9% 0.8%
Ongoing charges (including performance fees crystallised during the period)* 0.9% 0.8%
# Source – Morningstar.
^ Benchmark – MSCI World Health Care Index on a net
total return, sterling adjusted basis (see Glossary).
* Alternative Performance Measure (See Glossary).
1 Leverage calculated under the Commitment Method (see
Glossary).
Investing in the Future of Medicine: Worldwide Healthcare Trust PLC
(“WWH”) Targets Innovation in all Areas of Healthcare
INVESTMENT PROPOSITION
Ageing populations, rising global healthcare demand and accelerating
scientific discovery, are all fuelling innovation and long-term growth in the
healthcare sector. Furthermore, AI is having a significant impact on
accelerating scientific discovery.
WWH is an LSE-listed investment company that was founded in 1995, (with a
£16m IPO), to offer UK investors a ‘one-stop shop’ to gain exposure to
the most innovative, fastest-growing healthcare companies in the world. Some
of these companies are at the forefront of innovation in immunology, gene
therapy, surgical robotics and diagnostics, as well as therapeutic areas such
as cancer, cardiovascular and neurodegenerative diseases. Many of these
companies generate billions in annual revenues, others are still small and
going through the trial stages prior to regulatory approval. All of them
strive to enhance human lives.
WWH PORTFOLIO MANAGER
The WWH portfolio has been managed since launch by OrbiMed Advisors LLP, the
world’s largest, specialist, healthcare fund manager, with over U.S.$19bn
AUM and over 150 employees. OrbiMed is based in New York and has six other
offices around the world.
WWH invests globally in a diversified portfolio of growing, innovative
healthcare companies, across various sub-sectors. The OrbiMed team seeks
innovative, growth companies to build a differentiated portfolio with a high
active share, meaning that the portfolio looks very different to the global
healthcare index, the MSCI World Health Care Index (net total return sterling
adjusted). The team has analysts that cover all the sub-sectors and they
understand the science and the likely economic prospects of portfolio
companies and their rivals. They have the agility to respond quickly to
changes within companies and sub-sectors, as well as to changes in the
macroeconomic and political environments.
The portfolio is diversified by subsector and company size and one of the
largest holdings is a biotech M&A swap basket, which is a derivative product
constructed and managed by OrbiMed, consisting of around 50 biotech companies
that they believe are the most likely to be acquired.
In addition, the search for innovation results in a geographical bias to
countries where the most innovation takes place. This is mainly in North
America and to a lesser extent Europe, and unlike the index, to emerging
markets, in particular, China.
WWH PERFORMANCE
WWH has performed strongly since launch in 1995, generating a NAV total return
of +13.4% p.a., compared to the index return of +10.9% p.a., as at 30
September 2025.
The healthcare sector is well placed to continue to grow strongly, based on
supportive demographic trends and accelerating innovation. WWH is positioned
to take advantage of these opportunities, and appealing current valuations, to
offer attractive investment returns over the long run.
Statement from the Chair
“During the first half of the financial year, the Company’s net asset
value per share total return was +5.0% and the share price total return was
+10.9%. Both significantly outperformed the Benchmark over the period.”
PERFORMANCE
During the six-month period, global markets were shaped by a mix of economic
and geopolitical factors. Early on, investors were concerned about aggressive
U.S. tariff announcements, which triggered a sell-off of stocks worldwide and
ignited global recession fears. However, a market rebound then followed,
driven by strong corporate earnings, increased expectations for artificial
intelligence (AI) technologies and an interest rate cut by the U.S. Federal
Reserve.
In this context, Healthcare stocks significantly underperformed relative to
the broader market during the period. The MSCI World Healthcare Index,
measured on a net total return, sterling adjusted basis (the Company’s
Benchmark), fell by 5.3% compared to the MSCI World Index, which rose by
almost 15%. The principal reasons for the sector’s underperformance included
President Trump’s push to lower drug prices, which would decrease
pharmaceutical profit margins, and potential trade tariffs targeted at
healthcare products. Also, as markets recovered, there was a rotation by
investors out of traditionally defensive sectors like pharmaceuticals into
higher-growth areas such as technology and AI, which led to net outflows from
healthcare-focused ETFs and exacerbated the sector’s decline.
Despite the decline of the sector during the period, I am pleased to report
that the Company’s net asset value (NAV) per share total return was +5.0%,
significantly outperforming the Benchmark by 10.3%. The NAV performance was
achieved despite the headwind of sterling strengthening against the U.S.
dollar by 4.3%, the U.S. dollar being the currency in which the majority of
the Company’s investments are denominated.
At +10.9%, the Company’s share price total return was greater than its NAV
per share total return, reflecting a narrowing of the discount of the
Company’s share price to its NAV per share from 12.4% at the beginning of
the half year to 7.4% at the end.
The portfolio’s proprietary swap basket of biotech companies that might be
acquired and our exposure to Emerging Markets each made material positive
contributions to performance during the period. Looking at specific names in
the portfolio, the top two contributions came from Chinese pharmaceutical
company Jiangsu
Hengrui Pharmaceutical and U.S. Biotechnology company
Alnylam Pharmaceuticals. Meanwhile, the
two principal detractors from
performance were the U.S. Pharmaceutical company Vertex
Pharmaceuticals and U.S. medical technology company
Boston Scientific .
One significant event during the period was the successful Initial Public
Offering in June of Caris Life Sciences
, a U.S. precision medicine company that specialises in molecular profiling
and AI-driven cancer diagnostics to guide personalised treatment decisions. At
the time, Caris was the largest unquoted position in the portfolio. Since the
offering, the company’s share price has appreciated by more than 40% in the
public markets.
The Caris IPO was a key driver of a reduction in our exposure to unquoted
companies. In addition, no new unquoted investments were made during the
period and the overall value of our public investments increased. Overall,
unquoted companies comprised 4.5% of the total portfolio at the half year end
compared to 6.3% at the beginning of the period.
Further information on the Company’s investments and performance, including
our unquoted holdings, can be found in the Portfolio Manager’s Review.
As you will be aware, our Portfolio Manager uses modest leverage in the
portfolio, which adds to performance in periods of rising portfolio share
prices and benefits the Company over time. On average, leverage was 14.5%
during the period, adding +0.6% to performance. As at the half year-end,
leverage stood at 16.4%, compared to 10.8% at the beginning.
PERFORMANCE FEE
No performance fee was accrued as at 30 September 2025 and no performance fee
can become payable within the next year. The performance fee arrangements are
described in detail in the Company’s Annual Report.
CAPITAL
Share price discounts continue to persist across the U.K. investment company
sector. As at the period end, the average level of share price discount to NAV
in the sector stood at 13.9%. (source: Winterflood Investment Trusts).
The Board’s policy remains to buy back our shares if the Company’s share
price discount to the NAV per share exceeds 6% on an ongoing basis. Despite
the Company’s share buybacks, the discount can remain greater than 6% for
extended periods of time, depending on overall sentiment towards the Company,
the sector and investment trusts generally. Nonetheless, buybacks enhance the
NAV per share for remaining shareholders. In addition, the Board believes that
regular buybacks help to narrow the discount and go some way to dampening
discount volatility.
During the period under review, the Company repurchased a total of 87,115,980
shares for treasury at a cost of £273.8m and at an average discount of 7.0%.
At the period end, there were 407,515,824 shares in issue (excluding the
194,149,376 shares held in treasury). From the period end to 11 November 2025,
a further 16,363,770 shares have been bought back for treasury, at a cost of
£58.1m and at an average discount of 7.1%.
Further reflecting the Company’s commitment to its discount control policy,
the Company held a General Meeting in October 2025 to renew shareholder
authority to buy-back shares when it became clear that the shareholder
authority to buy-back 14.99% of the Company’s share capital granted at the
Annual General Meeting held in July 2025 would be exhausted before the
expected date of the 2026 Annual General Meeting. The Company’s share
buy-back authority will, as usual, be proposed for renewal at the Company’s
Annual General Meeting to be held in on Tuesday,14 July 2026.
DIVIDENDS
The Board has declared an unchanged interim dividend of 0.7p per share, for
the year to 31 March 2026. It will be payable on 9 January 2026 to
shareholders on the register of members on 28 November 2025. The associated
ex-dividend date is 27 November 2025. The portfolio’s exposure to larger,
dividend-paying companies declined during the period. In the absence of any
material change, it is expected that the final dividend for the year will be
lower than that paid last year.
I remind shareholders that it remains the Company’s policy to pay out
dividends at least to the extent required to maintain investment trust status.
These dividend payments are paid out of the Company’s net revenue for the
year and, in accordance with investment trust rules, a maximum of 15% of
income can be retained by the Company in any financial year.
It is the Board’s continuing belief that it is in shareholders’ best
interests to see the Company’s capital deployed in its investment portfolio
rather than paid out as dividends to achieve a particular target yield.
COMPOSITION OF THE BOARD
The renewal of the Board that I committed to oversee when I took on the role
of Board Chair is now largely complete, following the additions last year of
our newest Directors, Sian Hansen and William Hemmings. As such, I will be
retiring from the Board at the conclusion of the 2026 Annual General Meeting
in July. I am delighted to report that William Hemmings will succeed me at
that time as Board Chair. I know that William will be a strong leader for the
Board and the Company.
OUTLOOK
Your Board remains confident in the long-term prospects for investing in the
global healthcare sector.
Our Portfolio Manager believes that long-term growth will be underpinned by
strong innovation and demographic tailwinds. Nearer-term, it is also expected
that additional policy clarity in the U.S. and continuing high levels of
merger and acquisition activity, will be important investment drivers.
In the context of the Healthcare sector’s dynamics, your Board believes that
our Portfolio Manager will continue to generate attractive returns over time,
through astute stock picking as well as through its ability to allocate
capital nimbly and effectively across the different subsectors and
geographies.
Doug McCutcheon
Board Chair
12 November 2025
Portfolio
AS AT 30 SEPTEMBER 2025
Market value % of
Investments Sector Country/region £’000 investments
Eli Lilly Pharmaceuticals United States 150,124 10.3
Boston Scientific Health Care Equipment & Supplies United States 140,812 9.7
AstraZeneca Pharmaceuticals Britain 110,190 7.6
Stryker Health Care Equipment & Supplies United States 81,822 5.6
Edwards Lifesciences Health Care Equipment & Supplies United States 79,373 5.4
Intuitive Surgical Health Care Equipment & Supplies United States 77,794 5.3
Argenx Biotechnology Netherlands 63,055 4.3
Alnylam Pharmaceuticals Biotechnology United States 60,586 4.2
Caris Life Sciences Life Sciences Tools & Services United States 44,653 3.1
Daiichi Sankyo Pharmaceuticals Japan 40,384 2.8
Top 10 investments 848,793 58.2
Natera Life Sciences Tools & Services United States 35,970 2.5
Danaher Life Sciences Tools & Services United States 34,225 2.4
Cigna Group Health Care Providers & Services United States 29,684 2.0
Sino Biopharmaceutical Pharmaceuticals Hong Kong 29,142 2.0
Axsome Therapeutics Biotechnology United States 26,162 1.8
Apellis Pharmaceuticals Biotechnology United States 25,290 1.7
CG Oncology Biotechnology United States 24,339 1.7
Akeso Biotechnology China 24,265 1.7
Crossover Health* Health Care Providers & Services United States 23,874 1.6
Avidity Biosciences Biotechnology United States 22,650 1.6
Top 20 investments 1,124,394 77.3
Neurocrine Biosciences Biotechnology United States 22,617 1.6
Exact Sciences Life Sciences Tools & Services United States 22,270 1.5
Shanghai International Medical Instruments Health Care Equipment & Supplies China 22,148 1.5
UCB Pharmaceuticals Belgium 20,511 1.4
United Therapeutics Biotechnology United States 19,698 1.4
SI-BONE Health Care Equipment & Supplies United States 19,135 1.3
Integer Holdings Health Care Equipment & Supplies United States 18,424 1.3
Thermo Fisher Scientific Life Sciences Tools & Services United States 16,737 1.1
Roivant Sciences Biotechnology United States 12,815 0.9
Beijing Yuanxin Technology* Health Care Providers & Services China 12,353 0.8
Top 30 investments 1,311,102 90.1
Zai Lab Biotechnology China 11,945 0.8
Ruipeng Pet Group* Health Care Providers & Services China 10,587 0.7
Ascendis Pharma Biotechnology Denmark 10,557 0.7
Structure Therapeutics Biotechnology United States 9,900 0.7
Hangzhou Tigermed Consulting Life Sciences Tools & Services China 9,248 0.7
EDDA Healthcare & Technology* Health Care Equipment & Supplies China 9,192 0.6
Carlsmed Health Care Equipment & Supplies United States 8,472 0.6
Visen Pharmaceuticals Biotechnology China 5,902 0.4
Jiangxi Rimag Health Care Providers & Services China 5,322 0.4
API Holdings* Health Care Providers & Services India 4,881 0.3
Top 40 investments 1,397,108 96.0
MabPlex* Health Care Providers & Services China 4,728 0.3
BrightSpring Health Services Health Care Providers & Services United States 4,657 0.3
Gushengtang Health Care Providers & Services China 4,081 0.3
CSPC Pharmaceutical Pharmaceuticals China 4,075 0.3
ImageneBio Pharmaceuticals United States 788 0.1
Peloton Therapeutics - Milestone* Biotechnology United States 522 0.0
New Horizon Health^ Life Sciences Tools & Services China – –
Total equities 1,415,959 97.3
Biotech M&A Target Swap Swap Baskets United States 162,978 11.2
Jiangsu Hengrui Pharmaceutical Pharmaceuticals China 85,192 5.8
Apollo Hospitals Enterprise Health Care Providers & Services India 16,486 1.1
Less: Gross exposure on financed swaps (225,295) (15.4)
Total OTC Swaps 39,361 2.7
Total investments including OTC Swaps 1,455,320 100.0
* Unquoted holding
^ Suspended holding
SUMMARY
Market value % of
Investments £’000 investments
Listed Equities 1,349,822 93.0
Unquoted Equities 66,137 4.3
Equity Swaps 39,361 2.7
Total of all investments 1,455,320 100.0
Portfolio Manager’s Review
MARKETS
The global equity markets for the six-month period ended 30 September 2025
were shaped by a variety of factors, beginning with the administration of U.S.
President Donald Trump. The start of April 2025 saw significant volatility
triggered by “Liberation Day” tariffs, which caused sharp drops in market
indices. After that early turbulence, the market staged a sustained recovery
through the rest of the period with positive momentum. In fact, each month saw
new all-time highs recorded for the MSCI World Index and the S&P 500,
respectively. The overall six - month run was generally a
bullish period for equity markets, driven by the U.S. Federal Reserve’s
decision to cut interest rates, solid corporate earnings, and a resumption of
the Technology rally post the April sell off, eschewing concerns on tariffs,
unemployment, GDP growth, and inflation.
Conversely, healthcare stocks materially underperformed during the half year.
More specifically, our Benchmark, the MSCI World Health Care Index,
underperformed the MSCI World Index by approximately 20% (sterling; total
return). A confluence of headwinds has weighed on healthcare stocks over the
past six months, but the largest has been the Trump administration’s highly
threatening tariff and drug pricing policy initiatives. These issues,
particularly the perceived threat of a calamitous change to federal drug
pricing rules, have kept investors away from healthcare, especially given the
broader stock market rally.
ALLOCATION
The Company’s long-standing allocation strategy remained unchanged in the
first half of the financial year. Overall, our allocation strategy represents
a diverse distribution of investments across all the major subsectors and
primary geographies. However, our prioritisation of innovation and growth as
key pillars of our investment strategy impacts our allocation across the
Benchmark sectors.
For example, allocation to Pharmaceuticals (ex-Japan) remained underweight,
owing to (1) disparate fundamentals across the group, (2) the relatively large
weight that is represented within the Benchmark, and (3) the persistent
overhang of potential U.S. healthcare policy initiatives. As of 30 September
2025, total investments were 20.3% of NAV. Allocation to Pharmaceuticals
decreased during the period, from 22.2% to 25.7% below the Benchmark as we
actively reduced exposure to the subsector.
Additionally, allocation to Biotechnology remained above the collective
Benchmark weighting, owing to (1) our bullishness around the enormous
therapeutic innovation and new drug production that stems from Emerging
Biotech companies and (2) the relatively small weight that is represented in
the Benchmark. As of 30 September 2025, the total investment in Biotechnology
was 30.8% or 21.6% above the Benchmark, an increase of relative exposure 1.3%
since the beginning of the financial year.
As of 30 September 2025
Subsector WWH % NAV MSCI World HC % Difference %
Pharmaceuticals 20.3 46.0 (25.7)
Big Pharma 18.4 41.2 (22.8)
Spec Pharma/Generics 1.9 4.8 (2.9)
Biotechnology 30.8 9.2 +21.6
Big Biotech 0.0 6.4 (6.4)
Emerging Biotech 30.8 2.8 +28.0
Life Science Tools 10.6 8.6 +2.0
Medical Technology 29.8 18.7 +11.1
Healthcare Services 2.8 13.7 (10.9)
Japan 2.8 3.8 (1.0)
Emerging Markets 14.7 0.0 +14.7
Privates 4.6 0.0 +4.6
Total 116.4 100.0 +16.4
Figures expressed as a % of total Net Asset Value. This includes all
derivatives as an economically equivalent position in the underlying holding
and allocated to the underlying holding’s respective Sector and Region.
Another highly innovative sector is Emerging Markets. Specifically, Chinese
Biotechnology stocks which were a healthcare “hot bed” in 2025. Notably,
this sector is not represented in the Benchmark. Our investments in Emerging
Markets reached 14.7% of NAV, up from 8.4% at the start of the period. Share
price appreciation and incremental purchases increased the exposure here.
In non-therapeutics, our exposure to the Life Science Tools sector turned
bullish during the period, causing us to move from an underweight to an
overweight position relative to the Benchmark. Additional investments in the
liquid biopsy industry given robust tailwinds for these companies, in addition
to positive portfolio attribution, increased our exposure. Conversely, our
exposure to Healthcare Services remained bearish, increasing our underweight
positioning to a position 10.9% below the Benchmark weighting. Exposure here
declined due to a reduction in our managed care and hospital investments given
ongoing policy risks and macro pressures, as well as negative attribution.
Finally, Medical Technology exposure remained mostly constant, bullishly above
the Benchmark, as strong fundamentals, outsized growth, and low policy risk
support our positive investment view going forward.
PERFORMANCE
For the six-month period ended 30 September 2025, we are pleased to report
both positive absolute and relative performance. Despite negative returns for
global healthcare stocks in the period, the Company’s total return was
+5.0%, representing an excess return of 10.3% versus the Benchmark, MSCI World
Health Care Index. This excess return represents the Company’s best first
half in 20 years and represents the best six-month period in the past 10
years.
Overall, the allocation effect was a key driver of outperformance, with
positive returns enhanced by stock picking. Despite ongoing volatility within
the Healthcare sector over the past four-plus years, the Company has persisted
with its long-term recipe for success, namely overweighting the most highly
innovative sectors, like Biotechnology and Emerging Markets, and overweighting
secular growth sectors like Medical Technology. This is typically at the
expense of Pharmaceuticals, a heterogeneous sector of companies at different
ends of the innovation spectrum at any given time.
Whilst this strategy can be tested at times of broad market duress, when
Healthcare turns defensive, the first half market environment was clearly
“risk on.” Lowered interest rates and economic resilience despite policy
uncertainty and some geopolitical risk created a market environment favourable
to the Company’s ongoing allocation strategy. Clear outperformance was
measured in China Healthcare stocks (the HSHCI) and Biotechnology stocks (the
XBI) whilst Pharmaceuticals (the DRG) was negative, largely in line with the
Benchmark.
Performance since inception to 30 September 2025 remains strong, with a
+4,471% return since April 1995. This represents an average annualised return
of 13.4% over the 30-plus year period. This ranks the Company in second place
among all closed end trusts (>£250m) across this period, regardless of
industry (source: Winterflood). These figures also show a clear outperformance
of the (blended) Benchmark over this period and over the FTSE 100 index as
well.
SUB-SECTOR CONTRIBUTION
During the period, outsized excess returns came primarily from three
subsectors: Biotechnology, Emerging Markets, and Life Science Tools. The
primary offset of import was Medical Technology.
In Biotechnology, the Company’s total return was +6.4% versus -0.3% for the
Benchmark for an excess return of +6.7%. This return includes +3.9% from
individual equity investments and an additional +2.8% from our proprietary
swap basket of mergers & acquisitions (“M&A”) targeted securities
(totalling 60 hand-selected stocks as of 30 September 2025). The combination
of stock selection and allocation effect drove performance. A variety of
tailwinds also contributed, including a multitude of clinical and commercial
catalysts, an inflection in the pace of biotech M&A beginning in March, an
interest rate cut, and further expected interest rate cuts.
In Emerging Markets, the Company’s total return was +3.7%, virtually all
represented by China Healthcare stocks. With the Benchmark devoid of this
sub-sector, 100% of this contribution was excess return. After years of macro
- factors obfuscating the innovation coming from China, the
first half was largely clear of this obstacle. Moreover, a number of western
companies doing a plethora of licensing deals with Chinese biotechnology
companies triggered an overdue re-rating for the sector. Stock selection
enhanced returns as well, including two investments that represented two of
the top five contributors in the period, Jiangsu Hengrui
Pharmaceutical and
Sino Biopharmaceutical .
In Life Science Tools, the Company’s total return was +1.2%, versus -0.2%
for the Benchmark for an excess return of +1.4%. The majority return here came
from a single investment, specifically the successful initial public offering
(“IPO”) of the diagnostics company, Caris Life
Sciences .
In Medical Technology, the Company’s total return was -2.1%, versus -0.4%
for the Benchmark representing underperformance of -1.7%. Here a small
allocation impact was exacerbated with stock picking as two of our larger
holdings – Boston Scientific and
Intuitive Surgical – were both
included in the top five individual detractors in the first half.
PRIVATE HOLDINGS
During the half year period ended 30 September 2025, the Company strategically
refrained from making new investments in unquoted companies. While we have
seen significant improvement in the capital markets for small and mid-cap
Healthcare companies, we have remained on the sidelines with respect to new
unquoted investments. Most of our unquoted companies remain well capitalised
and continue to be selective with regards to pursuing listings. We are
confident that more of the Company’s unquoted investments will achieve
listings within the next year as the capital market funding environment
further improves.
Caris Life Sciences , a precision medicine company that
specialises in molecular profiling and
AI-driven cancer diagnostics to guide personalized treatment decisions,
completed its IPO in June. Caris was our largest unquoted position, and since
the offering, the stock has appreciated more than 40% in the public markets.
At the end of the six-month period, unquoted investments made up 4.3% of the
portfolio as compared to 6.1% at the end of the last financial year. For the
six months ended 30 September 2025, the Company’s unquoted investments fell
£7.7 million, from an opening market value of £106.8 million across nine
companies.
The existing unquoted portfolio constitutes a diverse set of companies.
Geographically, exposure is evenly distributed among Emerging Markets and
North American companies. On a subsector basis, the exposure is concentrated
in Services, with small exposures to Biotechnology and Medical Technology.
MAJOR CONTRIBUTORS TO PERFORMANCE
The top contributor in the six-month period was the Company’s proprietary
swap basket of M&A targeted securities. The basket returned +24.9% in the
first half, outperforming both the XBI (+15.9%) and the Biotechnology portion
of the Benchmark (-2.9%). This outperformance was driven by a concerted effort
to populate the basket with Emerging and Commercial stage biotechnology
companies, selected through a variety of factors. We use an ongoing screening
process including but not limited to the examination of (1) therapeutic area,
(2) clinical innovation, (3) management teams that are willing sellers, and
(4) capital situation. Further discussion of the basket performance is
contained below (see Derivative Strategy).
On an individual security basis, the largest contributor in the first half was
Jiangsu Hengrui Pharmaceutical , a
China-based, blue-chip, biotechnology company with the largest, best-in-class
clinical pipeline in all of China. Share price appreciation came from a
combination of reversion-to-the-mean and a renewed appreciation of the
company’s innovative pipeline. Licensing deals now account for over half of
the company’s revenue in the domestic market, and out-licensing deals with
western companies also beat expectations. The strong pipeline with over 130
products in the clinical development stage serves Jiangsu
Hengrui Pharmaceutical
as a business development “supermarket”
for multinational corporations.
Alnylam Pharmaceuticals is a commercial stage
Biotechnology company that specialises in developing RNA interference (RNAi)
therapeutics. These innovative medicines work by “silencing” the genes
that cause or contribute to disease. The company enjoyed the landmark approval
of first-in-class siRNA therapy AMVUTTRA (vutrisiran) in ATTR-cardiomyopathy
– a rare, progressive form of heart disease caused by the accumulation of
abnormal proteins called amyloid fibrils in the heart muscle – on 20 March
2025. Since the launch of AMVUTTRA, the company’s share price has
outperformed the broader biotech sector following the stronger than expected
sales trajectory reported by the company. Long-term sales estimates now exceed
U.S.$10 billion. The company is on track to achieve profitability by the end
of calendar 2025 and continues to build on its rapidly expanding pipeline from
its industry leading siRNA platform across targets and tissue types.
Another Chinese biotechnology company that is an emerging leader in novel
research and development is Sino Biopharmaceutical
. The company has evolved from
a traditional generic drug company to a truly innovative biopharmaceutical
player. Since 2024, revenue and profit growth have inflected. In addition,
Sino Biopharmaceutical has been active on
both acquisition of innovative assets and out-licensing innovative products to
western pharmaceutical companies. Similar to Jiangsu
Hengrui Pharmaceutical , the company’s growth is coming
from a recovery in earnings in the domestic market whilst out-licensing and
business development deals have been key catalysts for share price
outperformance.
A long-term pioneer in immunology and neuroscience, Belgium-based
UCB has emerged as a true leader in these fields
after the approval and launch of BIMZELX (bimekizumab) for plaque psoriasis
late in 2023. A better than expected launch triggered a share price re-rating
in 2024. In late 2024, however, the company received a second approval for
BIMZELX, for severe hidradenitis suppurativa (HS), a chronic, painful and
potentially debilitating inflammatory skin disease. We were opportunistic in
buying the stock when tariff-related concerns disrupted the share
price. The share price subsequently recovered and then materially inflected at
the end of the first half after a competitor’s pipeline asset in HS failed
to show a meaningful differentiated benefit.
Caris Life Sciences is a cutting-edge precision medicine
company that uses advanced molecular
profiling and artificial intelligence to guide personalised cancer treatment
and drug development. The stock nearly doubled in the two months after a
successful IPO in June 2025 given investor optimism around volume and pricing
in their core tissue therapy business. This was affirmed after the company
reported better than expected financials in the second quarter, with profit
and cash flows beating analyst estimates. The stock did moderate in September,
however, given the higher bar for a third quarter beat and some rotation out
of diagnostics. We remain enthusiastic about the company’s growth profile
and pipeline opportunities which we believe are not fully reflected in the
valuation.
MAJOR DETRACTORS TO PERFORMANCE
UnitedHealth Group is a global healthcare company that
provides a wide range of healthcare
services, primarily health insurance, pharmacy care, and data analytics.
Several factors weighed on the share price in the first half, with the stock
correcting 60% (local currency) from its April 2025 high to a July 2025 low.
Whilst the company’s earnings were challenged by rising medical costs that
ailed all health insurers, idiosyncratic issues amplified earnings pressure,
undermined sentiment, and hurt management credibility. Most notably, changes
in Medicare reimbursement put earnings quality and durability into question,
spurring the departure of both the CEO and CFO. Despite the losses, we exited
the position given a valuation that still does not fully discount these issues
and the potential for sustained headline risk.
The market focus on obesity inflected in 2024 and has not subsided in 2025 and
Eli Lilly is the victim of such
intense scrutiny. The commercial success of tirzepatide, the company’s dual
combination of “GLP + GIP”, is undeniable. The formulations of tirzepatide
in MOUNJARO (for diabetes) and ZEPBOUND (for obesity) have smashed
pharmaceutical sales records, eclipsing U.S.$30 billion in combined global
sales in 2025, in just over three years on the market. As the company attempts
to prolong these fortunes, successful encores are a must. One commercial area
up for grabs is orals: attempting to harness the power of these injectable
medicines into an easy to make, easy to take oral pill. The company presented
the first Phase III obesity data for its leading oral candidate –
orfoglipron – in August 2025. The headline data for ATTAIN-1 (in over 3,000
obese patients) was impressive with average weight loss of 27 lbs and -12.4%
of body weight. However, the investment community was expecting -13% to -15%
weight loss. Despite reporting a strong quarterly result on the same day
(sales growth +38%, EPS growth +61%, and raised guidance), the stock fell,
beyond -15% (local currency). We remain bullish on the long-term success of
these medications for the treatment and prevention of a variety of
cardiovascular and metabolic diseases.
Intuitive Surgical is the global leader in the surgical
robotics industry and is currently in
the rollout of its fifth-generation robotic system, named “Davinci V”.
Despite positive commercial tailwinds and ongoing strong financial results,
investors have become increasingly concerned about two key topics: (1) U.S.
hospital capital spending and (2) emerging instrument competition. The
Medicaid system in the U.S. has been under increased scrutiny in recent
months. If Federal funding is cut, it could have a pronounced negative impact
on hospital capital budgets. This could adversely impact vendors, such as
Intuitive Surgical. Turning to competition, there are several competitor
companies that have been attempting to refurbish and re-sell to hospitals the
company’s own consumable products (at a lower price). While these companies
have been operating for several years with limited success, investors have
only recently become aware of them and thus are perceived as a new threat. We
remain confident in the company’s ability to fend off competition, execute
commercially in this environment, and to continue to innovate the future of
robotic surgery for years to come.
Boston Scientific is one of the largest, most innovative
Medical Technology companies in the
world, operating in several end markets, including interventional cardiology,
cardiac rhythm management, peripheral vascular, electrophysiology, urology,
and gynecology. Last year, the company made one of the largest new medical
technology product launches in years, the FARAPULSE Pulsed Field Ablation
(PFA) - a non-thermal cardiac ablation system used to treat atrial
fibrillation (AFib). The system delivers short, high-energy electrical pulses
to selectively destroy abnormal heart tissue, while aiming to spare
surrounding structures like the esophagus and phrenic nerve. A major step
forward in treating AFib. Given the robust early success of the launch,
investors grew concerned that growth would have to decelerate in the second
half of calendar year. This began to pressure the share price. Moreover,
shares in the company were also adversely impacted late in the review period
due to an idiosyncratic sell-off in the space, exacerbated by a rotation into
technology stocks. We remain convinced about the long-term growth prospects
for Boston
Scientific . In fact, on the last day of the
reported period, the company raised long-term revenue guidance during a
company hosted analyst meeting, striking a positive tone for the future.
Boston-based Vertex Pharmaceuticals
is a leading, commercial-stage Biotechnology company with a focus on
therapeutic categories like cystic fibrosis, cardiovascular, metabolic, and
pain. The share price fell due to negative updates for its pain franchise.
First, the company announced the Phase II failure of its next-generation acute
pain treatment, VX-993, an experimental drug designed to treat pain by
blocking specific sodium channels in the peripheral nervous system.
Subsequently, the U.S. Food and Drug Administration (“FDA”) informed the
company that it would not approve a new, broad label for JOURNAVX
(suzetragine), the company’s first-generation product already on the market.
Given the now stunted prospects for the company’s pain franchise and the
saturated growth for their innovative cystic fibrosis franchise, we exited the
stock.
DERIVATIVE STRATEGY
The Company has the ability to utilise equity swaps and options as part of its
financial strategy. Equity swaps are a financial tool (a derivative contract)
that allow for synthetic exposure to a single stock (Single Stock Equity
Swaps) or a basket of single stocks (Equity Basket Swaps).
Equity basket swaps are typically constructed within a well-defined theme and
basket facilitates management of the investment theme and tracking of
performance. For example, having 15 to 50+ additional positions at smaller
weights in the portfolio (i.e., non-core) is suboptimal. The equity basket
swap contains multiple single stock long positions, and the basket swap
counterparty is Goldman Sachs, allowing for confidence in forward trading and
rebalancing strategies.
The Company strategically invested in one customised tactical basket swap,
targeting growth opportunities in undervalued small and mid-capitalisation
Biotechnology, Pharmaceutical and Medtech companies. This basket was
constructed to capitalise on investment opportunities possessing considerable
potential as attractive acquisition targets for larger corporations (M&A swap
basket). During the period under review, the equity basket swap gained £42.5
million, representing a +2.8% return for the Company and accounting for c.55%
of the Company’s total return for the six-month period.
LEVERAGE STRATEGY
Historically, the typical leverage level employed by the Company has been in
the low-double digits to mid-to-high teens range. Considering the market
volatility during the past four plus financial years, we have, more recently,
used leverage in a more tactical fashion.
In 2025, we have flexed leverage more notably than in some recent periods,
going as low as 9% (coming out of President Trump’s “Liberation Day”
tariff announcements, which created some market tumult and uncertainty) and as
high as 20% (as performance inflected and our bullishness for a sustained move
in Biotechnology and Emerging Markets increased).
The Company ended the period at 16%, underscoring our continued bullishness
but with a nod to the possibility of further policy uncertainty, debate over
another interest rate cut, and perhaps unforeseen geopolitical instability.
SECTOR DEVELOPMENTS
A recurring theme throughout 2025 has been the omnipresence of the Trump
Administration and the rippling impact of his policy announcements and
commentary, both formally (such as Executive Orders) and informally (such as
social media). However, despite the routine rhetoric, there has yet to be any
policy that has been objectively calamitous for the healthcare industry.
Whilst there has been a range of both positives and negatives, given the low
expectations, we think the net effect this far is largely neutral on industry
fundamentals. That said, this ongoing uncertainty around new policy
initiatives has been the primary reason for Healthcare underperformance in the
first half.
In Healthcare, the two key overhangs weighing on therapeutic stocks have been
U.S. drug pricing and pharmaceutical tariffs. Whilst these appeared to be
separate issues early on in this administration, we believe these two issues
are connected, again with President Trump making threats to ultimately achieve
his policy goals. It is our view that there will be no “250% tariff” on
pharmaceuticals (President Trump on 5 August 2025) or perhaps any tariffs at
all. Moreover, we don’t believe there will be (or can be, legally)
unilateral lowering of “prescription drug prices by 80%” (President Trump
on 12 May 2025).
What does President Trump want from the Biopharma industry? Some things are
clear, including (1) re-shoring of drug manufacturing in the U.S., (2) ensure
U.S. taxes are being paid by minimising manufacturing/IP loop holes, (3)
address national security concerns given the absence of domestic antibiotic
and vaccine manufacturing, (4) increase investment in U.S.-based R&D
facilities, manufacturing, and employment, and (5) maintain the innovation
lead over China, which has narrowed materially over the past two years. On the
drug pricing front, we believe President Trump wants to alter the broad
ecosystem of prescription drug pricing, such as (1) making developed countries
“pay their fair share” for innovative drugs and raise drug prices ex-U.S.,
(2) lower list prices for cash-paying Americans, (3) lower out-of-pocket
expenses for most impoverished Americans and seniors, and (4) tackle the issue
of “middle men”, the managed care providers who absorb 50-60% of the value
of prescription medicines in the U.S.
Increased clarity on President Trump’s tactics became clear on 30 September
2025, when an unexpected landmark agreement between the Trump Administration
and Pfizer was announced. The deal rapidly closed much of the uncertainty
around both tariffs and drug pricing in one sweeping package between the two
sides. First, a new on - line website will be created,
called “TrumpRx”, where cash paying Americans will be able to fill their
prescriptions at prices that will be up to 85% lower than current list prices,
with an on average discount of 50%. This is a win for Pfizer (and ultimately
the entire industry) as this level of discount (50% off list prices) is
already what drug makers sell to Managed Care and PBMs in the commercial sales
channel. In fact, we may see a dramatic increase in cash pay volumes given
this new pricing scheme in what was otherwise a de minimis sales opportunity
historically. And of course, this is a win for the administration as the
prophecy of “lowering prescription drug prices by 80%” was not only
achieved, but bettered.
Second, on tariffs, Pfizer received a complete stay on tariffs (for a minimum
of three years) for accepting several specific deal terms, in addition to
TrumpRx. This included a pledge to commit to U.S.$70 billion in U.S.
manufacturing and R&D investments “over the next few years”, building upon
the U.S.$83 billion that Pfizer invested over the previous seven years. This
is a clear win for Trump and mostly just “business as usual” for Pfizer
from a capex perspective. We do note that over a dozen large cap
pharmaceutical companies, such as Eli Lilly, GSK, and JNJ to name a few, have
already publicly pledged U.S. investments across manufacturing and R&D, an
amount totalling a staggering U.S.$432 billion over the next 3-10 years
(source: company filings; Bloomberg).
Surprisingly, Pfizer also agreed to terms on a Most Favoured Nation (MFN) drug
pricing scheme, one area that investors were most concerned. However, based on
the details that were disclosed, the outcome appears to be rather benign for
Pfizer. MFN pricing today will apply only to current Medicaid patients, where
prices are already low, and represents only 2.5% of total company sales. We
estimate that pricing compression here will result in <1% hit to Pfizer’s
topline, a completely manageable impact. A clear win for Pfizer. For President
Trump, a double win: a key industry player agrees to MFN and a headline win of
lowering out of pocket expenses for the poorest of Americans.
Finally, Pfizer agreed to MFN pricing to be applied to all NEW products going
forward, across both Medicaid and Medicare channels. A blow to the industry?
Hardly. Whilst most details have been kept confidential, what details we do
know are suggestive of a benign outcome. Here, Pfizer will not be able to
launch a new product ex-U.S. below the price in the U.S. The net effect of
this will be that at the MFN price and the U.S. price will largely be the
same, thereby avoiding any current or future pricing pressure in the U.S. This
will also increase prices in foreign countries, a goal of President Trump.
Applying this price scheme to only new products will prevent any immediate
budgeting issues in foreign lands, rather, there will be a new 10 year runway
for foreign payers to adjust budgets and redirect a proportion of GDP to drug
spending, so that they “pay their fair share” for innovation going
forward. Again, countries not electing to accept these new prices will forego
lifesaving innovations and/or will be subject to (or at least threatened with)
harsh tariffs.
On 10 October 2025, AstraZeneca was
the second company to agree to similar terms with the U.S. government. Here
agreed upon items were similar: (1) selling some select medicines on Trumps
“at a discount of up to 80% off list prices”, (2) investing U.S.$50
billion in manufacturing and R&D to support domestic sourcing, (3) MFN pricing
scheme on current Medicaid products, (4) MFN pricing on all new products, and
(5) delaying company-specific tariffs for three years.
Overall, we believe this deal sets a historic precedent, and other companies
will be lining up to do something similar. The market reaction to the news was
certainly historic with a two-day move of +10% for the DRG representing [a
5-standard deviation move]. The trickledown effect on Biotechnology stocks was
also positive, with the XBI advancing its own +10% in a subsequent two-week
move. Pfizer’s CEO, Albert Bourla, commented as to why, “We now have the
certainty and stability we need on two critical fronts, tariffs and pricing,
that have suppressed the industry’s valuations to historic lows.”
The ongoing saga over U.S. drug pricing was not just a 2025 phenomenon.
Rather, investor concern over putative drug pricing policy changes in the U.S.
extends at least 10 years. A period which began September 2015 with an ominous
Tweet by then-presidential hopeful, Senator Hillary Clinton, who said “Price
gouging like this in the specialty drug market is outrageous. Tomorrow I’ll
lay out a plan to take it on” in reference to media headlines infamous drug
developer (and later convicted criminal) Martin Skreli. This 10-year period
coincides with a period in which the NASDAQ is up 4x, the S&P 500 up 3x,
whilst the MSCI World Health Care Index is up <1x and the XBI is not up at
all. We believe the “Wall of Worry” may be now over.
Elsewhere, as we survey the landscape of Trump appointees across the key
Healthcare government positions, two are worth consideration here. First,
Robert F. Kennedy Jr. as the Secretary of Health and Human Services has come
mostly as advertised. His lack of conventional scientific credentials and
history of controversial views has certainly marked his tenure and confirmed
his reputation.
Kennedy’s handling of the Advisory Committee on Immunisation Practices was
highly questionable after he dismissed the entire expert panel and replaced
them with many dubiously qualified candidates. His focus on neglected public
health issues (prevention, nutrition, environment) is welcome and could lead
to meaningful changes if executed with sound science and strong leadership.
However, whilst he has emphasised combating chronic disease, his unclear
policy direction and possible policy risks has raised questions about his
leadership abilities and ability to execute on implementation.
Overall, tangible industry negatives from Kennedy’s tenure are primarily
around vaccines (public perception, accessibility, regulatory obstruction,
valuation impact, reduced federal funding). His consistent criticisms of
large-cap pharmaceutical companies have, at least, qualitatively impacted
their image and perhaps created some small degree of uncertainty in the minds
of generalist investors. Otherwise, his impact has otherwise been benign (so
far) and the industry has not been uniformly harmed like vaccine players have.
Of far more substantial import has been the tenure of the new FDA
Commissioner, Martin Makary. He officially took office on 1 April 2025 and we
view his first six months as consistent and positive. His early emphasis was
on transparency, “common sense” regulation, and restoring trust in the FDA
has been welcome to investors. His desire to lean toward regulatory
flexibility: e.g., streamlining reviews, moving away from overly burdensome
regulation, using less animal testing, and giving more weight to diverse types
of evidence has been surprisingly progressive. He has also spent time
addressing agency culture and trying to do “less with more” given
budgetary cuts he was forced to deal with.
Perhaps Dr. Makary’s signature program thus far is the Commissioner’s
National Priority Voucher (CNPV) program, a pilot “voucher-style”
initiative under which selected drug developers can receive a voucher that
entitles them to a dramatically shortened review timeline for a new drug or
biologic, from 10-12 months to as little as 1-2 months. The focus on selection
includes all of the criteria that an investor may favour, such as (1) a health
crisis in the U.S. like COVID-19, (2) tackling a large unmet public health
need, and (3) a drug candidate that delivers innovative cures. Finally, of
note, we have seen no evidence of a slowdown in new drug approvals with this
current FDA commissioner. Whilst we expect a modest dip in approvals
year-over-year in 2025, the current trend is very much consistent with the
past eight years of approvals, the majority of which have been under a Trump
Administration, which has overseen a >70% inflection in new drug approvals
versus President Obama’s two terms.
OUTLOOK
In summary, the first half of financial 2025 underscores the Company’s
ability to generate strong relative and absolute returns even in a challenging
sector environment. While global Healthcare stocks broadly underperformed the
wider equity markets, the Company delivered double - digit
outperformance through disciplined allocation, a focus on innovation-driven
subsectors, and successful stock selection. Long-term performance remains
exceptional, with a cumulative return of over +4,400% since inception,
demonstrating the enduring strength of the Company’s strategy and execution.
Looking ahead, we maintain a constructive outlook for both the Healthcare
sector and the portfolio. Innovation remains robust across Biotechnology,
Medical Technology, and Emerging Markets, whilst policy clarity in the U.S. is
beginning to lift a decade-long overhang. Against this backdrop, we believe
the Company is well positioned to continue delivering sustainable long-term
value and superior returns to shareholders utilising our long-term recipe for
success.
Sven H. Borho and Trevor M. Polischuk
OrbiMed Capital LLC
Portfolio Manager
12 November 2025
Contribution by Investment
ABSOLUTE CONTRIBUTION BY INVESTMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2025
Principal contributors to and detractors from net asset value performance
Contribution
Contribution per share^
Top five contributors Sector Country £’000 p
Jiangsu Hengrui Pharmaceutical Pharmaceuticals China 28,456 6.2
Alnylam Pharmaceuticals Biotechnology United States 24,524 5.3
Sino Biopharmaceutical Pharmaceuticals China 16,799 3.6
UCB Pharmaceuticals Europe 11,178 2.4
Caris Life Sciences Life Sciences Tools & Services United States 10,625 2.3
Contribution
Contribution per share
Top five detractors Sector Country £’000 p
Vertex Pharmaceuticals* Biotechnology United States -10,328 -2.2
Boston Scientific Healthcare Equipment and Supplies United States -11,251 -2.4
Intuitive Surgical Healthcare Equipment and Supplies United States -12,045 -2.6
Eli Lilly Pharmaceuticals United States -23,958 -5.2
UnitedHealth Group* Healthcare Providers and Services United States -50,312 -10.9
^ Calculation based on 460,928,790 shares being the
weighted average number of shares in issue during the six months ended 30
September 2025.
* Not held at 30 September 2025.
Interim Management Report
PRINCIPAL RISKS AND UNCERTAINTIES
The Directors continue to review the Company’s key risk register, which
identifies the risks and uncertainties that the Company is exposed to, and the
controls in place and the actions being taken to mitigate them.
A review of the half year and the outlook for the Company can be found in the
Chair of the Board’s Statement and the Portfolio Manager’s Review. The
principal risks and uncertainties faced by the Company include the following:
• Exposure to market risks and those
additional risks specific to the sectors in which the Company invests, such as
political interference in drug pricing.
• The Company uses leverage (both
through derivatives and gearing) the effect of which is to amplify the gains
or losses the Company experiences.
• Macro events (including
geo-political and regulatory) may have an adverse impact on the Company’s
performance by causing exchange rate volatility, changes in tax or regulatory
environments, and/or a fall in market prices. Emerging markets, which a
portion of the portfolio is exposed to, can be subject to greater political
uncertainty and price volatility than developed markets.
• Unquoted investments are more
difficult to buy, sell or value and so changes in their valuations may be
greater than for listed assets.
• The risk that the individuals
responsible for managing the Company’s portfolio may leave their employment
or may be prevented from undertaking their duties.
• The risk that, following the failure
of a counterparty, the Company could be adversely affected through either
delay in settlement or loss of assets.
• The Board is reliant on the systems
of the Company’s service providers and as such disruption to, or a failure
of, those systems could lead to a failure to comply with law and regulations
leading to reputational damage and/or financial loss to the Company.
• The risk that investing in companies
that disregard Environmental, Social and Governance (ESG) factors will have a
negative impact on investment returns and also that the
Company itself may become unattractive to investors if ESG is not
appropriately considered in the Portfolio Manager’s decision making process.
• The risk, particularly if the
investment strategy and approach are unsuccessful, that the Company may
underperform, resulting in the Company becoming unattractive to investors and
a widening of the share price discount to NAV per share. Also, falls in stock
markets, and the risk of a global recession, are likely to adversely affect
the performance of the Company’s investments.
Further information on these risks is given in the Annual Report for the year
ended 31 March 2025. The Board has noted that global markets are continuing to
experience unusually high levels of uncertainty and heightened geopolitical
risks. The Board continues to monitor this closely.
RELATED PARTY TRANSACTIONS
During the first six months of the current financial year no material
transactions with related parties have taken place which have affected the
financial position or the performance of the Company.
GOING CONCERN
The Directors believe, having considered the Company’s investment
objectives, risk management policies, capital management policies and
procedures, the nature of the portfolio and expenditure projections, that the
Company has adequate resources, an appropriate financial structure and
suitable management arrangements in place to continue in operational existence
for the foreseeable future and, more specifically, that there are no material
uncertainties relating to the Company that would prevent its ability to
continue in such operational existence for at least 12 months from the date of
the approval of this half yearly financial report. For these reasons, they
consider there is reasonable evidence to continue to
adopt the going concern basis in preparing the accounts.
DIRECTORS’ RESPONSIBILITIES
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial
statements contained within the Half Year Report have been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial
Reporting); and
(ii) the interim management report
includes a true and fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance
and Transparency Rules, being an indication of important events that have
occurred during the first six months of the financial year and their impact on
the condensed set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure Guidance
and Transparency Rules, being related party transactions that have taken place
in the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that
period; and any changes in the related party transactions described in the
last annual report that could do so.
The Half Year Report has not been reviewed or audited by the Company’s
auditors.
This Half Year Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the date of this report and such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information.
For and on behalf of the Board
Doug McCutcheon
Chair
12 November 2025
Income Statement
For the six months ended 30 September 2025
(Unaudited) 30 September 2025 (Unaudited) 30 September 2024
Revenue Capital Revenue Capital
Return Return Total Return Return Total
£’000 £’000 £’000 £’000 £’000 £’000
Gains on investments – 52,547 52,547 – 2,585 2,585
Exchange (losses)/gains on currency balances – (2,844) (2,844) – 6,906 6,906
Income from investments (note 2) 5,438 – 5,438 8,830 – 8,830
AIFM, portfolio management, and performance fees (note 3) (314) (5,975) (6,289) (408) (7,751) (8,159)
Other expenses (665) – (665) (654) – (654)
Net return before finance charges and taxation 4,459 43,728 48,187 7,768 1,740 9,508
Finance charges (60) (1,130) (1,190) (176) (3,342) (3,518)
Net return/(loss) before taxation 4,399 42,598 46,997 7,592 (1,602) 5,990
Taxation (63) – (63) (357) – (357)
Net return/(loss) after taxation 4,336 42,598 46,934 7,235 (1,602) 5,633
Return/(loss) per share (note 4) 0.9p 9.7p 10.6p 1.4p (0.3)p 1.1p
The “Total” column of this statement is the Income Statement of the
Company. The “Revenue” and “Capital” columns are supplementary to this
and are prepared under guidance published by the Association of Investment
Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has no recognised gains and losses other than those shown above
and therefore no separate Statement of Total
Comprehensive Income has been presented.
The accompanying notes are an integral part of these statements.
Statement of Changes in Equity
For the six months ended 30 September 2025
(Unaudited) (Unaudited)
30 September 30 September
2025 2024
£’000 £’000
Opening shareholders’ funds 1,679,346 2,080,417
Shares purchased for treasury (273,843) (99,759)
Return for the period 46,934 5,633
Dividends paid – revenue (8,174) (11,198)
Closing shareholders’ funds 1,444,263 1,975,093
Statement of Financial Position
As at 30 September 2025
(Unaudited) (Audited)
30 September 31 March
2025 2025
£’000 £’000
Fixed assets
Investments 1,415,959 1,673,659
Derivatives – OTC swaps 39,361 1,487
1,455,320 1,675,146
Current assets
Debtors 31,844 8,003
Cash and cash equivalents 31,267 93,584
63,111 101,587
Current liabilities
Creditors: amounts falling due within one year (74,168) (72,109)
Derivative – OTC Swaps – (25,278)
(74,168) (97,387)
Net current liabilities (11,057) 4,200
Total net assets 1,444,263 1,679,346
Capital and reserves
Ordinary share capital – (note 5) 15,042 15,042
Capital redemption reserve 9,564 9,564
Share premium account 841,599 841,599
Capital reserve 563,588 794,833
Revenue reserve 14,470 18,308
Total shareholders’ funds 1,444,263 1,679,346
Net asset value per share – (note 6) 354.4p 339.5p
Cash Flow Statement
For the Six months ended 30 September 2025
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 30 September
2025 2024
Note £’000 £’000
Net cash outflow from operating activities 8 (1,959) (4,336)
Purchases of investments and derivatives (385,106) (411,658)
Sales of investments and derivatives 609,006 420,462
Realised (losses)/gains on foreign exchange (2,690) 4,803
Net cash inflow from investing activities 221,210 13,607
Shares repurchased (272,097) (98,072)
Equity dividends paid (8,174) (11,198)
Interest paid (1,190) (3,518)
Net cash outflow from financing activities (281,461) (112,788)
Increase in net debt (62,210) (103,517)
Cash flows from operating activities includes interest received of £1,767,000
(2024: £1,684,000) and dividends received of £3,660,000 (2024: £7,448,000).
RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET DEBT
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 30 September
2025 2024
£’000 £’000
Increase in net debt resulting from cash flows (62,210) (103,517)
(Losses)/gains on foreign currency cash and cash equivalents (154) 2,103
Movement in net debt in the period (62,364) (101,414)
Net debt at 1 April 25,511 4,855
Net debt at 30 September* (36,853) (96,559)
* The net debt figure as at 30 September
2025 includes cash and cash equivalents less the overdraft drawn of
£68,120,000 (30 September 2024: £138,055,000).
Notes to the Financial Statements
1. ACCOUNTING POLICIES
The condensed Financial Statements for the six months to 30 September 2025
comprise the primary statements together with the related notes below. They
have been prepared in accordance with FRS 104 ‘Interim Financial
Reporting’, the AIC’s Statement of Recommended Practice published in July
2022 (‘SORP’) and using the same accounting policies as set out in the
Company’s Annual Report and Financial Statements at 31 March 2025.
Going concern
After making enquiries, and having reviewed the Investments, Statement of
Financial Position and projected income and expenditure for the next 12
months, the Directors have a reasonable expectation that the Company has
adequate resources to continue in operation for the foreseeable future. The
Directors have therefore adopted the going concern basis in preparing these
condensed financial statements.
Fair value
Under FRS 102 and FRS 104 investments have been classified using the following
fair value hierarchy:
Level 1 – Quoted market prices in active markets
Level 2 – Prices of a recent transaction for identical
instruments
Level 3 – Valuation techniques that use:
(i) observable market data; or
(ii) non-observable data
As at 30 September 2025 Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments held at fair value through profit or loss 1,349,822 – 68,023 1,417,845
Derivatives: OTC swaps (assets) – 39,361 – 39,361
Derivatives: OTC swaps (liabilities) – – – –
Financial instruments measured at fair value 1,349,822 39,361 68,023 1,457,206
As at 31 March 2025 Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments held at fair value through profit or loss 1.566,854 – 106,805 1,673,659
Derivatives: OTC swaps (assets) – 1,487 – 1,487
Derivatives: OTC swaps (liabilities) – (25,278) – (25,278)
Financial instruments measured at fair value 1,566,854 (23,791) 106,805 1,649,868
2. INCOME
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 30 September
2025 2024
£’000 £’000
Investment income 3,671 7,146
Interest Income 1,767 1,684
Total 5,438 8,830
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 2025 30 September 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
AIFM fee 62 1,183 1,245 72 1,365 1,437
Portfolio management fee 252 4,792 5,044 336 6,386 6,722
Performance fee charge for the period – – – – – –
314 5,975 6,289 408 7,751 8,159
As at 30 September 2025 no performance fees were accrued or payable (31 March
2025: nil accrued).
No performance fee could become payable by 30 September 2026.
See Glossary for further information on the performance fee.
4. RETURN/(LOSS) PER SHARE
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 30 September
2025 2024
£’000 £’000
The return per share is based on the following figures:
Revenue return 4,336 7,235
Capital return/(loss) 42,598 (1,602)
Total return 46,934 5,633
Weighted average number of shares in issue for the period 461,175,923 531,229,280
Revenue return per share 0.9p 1.4p
Capital return/(loss) per share 9.3p (0.3)p
Total return per share 10.2p 1.1p
The calculation of the total, revenue and capital returns per ordinary share
is carried out in accordance with IAS 33, “Earnings per Share (as adopted in
the EU)”.
5. SHARE CAPITAL
Total
Treasury shares
Shares shares in issue
number number number
As at 1 April 2025 494,631,804 107,033,396 601,665,200
Purchase of shares into treasury (87,115,980) 87,115,980 –
As at 30 September 2025 407,515,824 194,149,376 601,665,200
(Unaudited) (Audited)
30 September 31 March
2025 2025
£’000 £’000
Issued and fully paid:
Nominal value of ordinary shares of 2.5p 15,042 15,042
During the period ended 30 September 2025 the Company bought back ordinary
shares into treasury at a cost of £273.8m (Year ended 31 March 2025:
£176.5m).
6. NET ASSET VALUE PER SHARE
The net asset value per share is based on the assets attributable to equity
shareholders of £1,444,263,000 (31 March 2025: £1,679,346,000) and on the
number of shares in issue at the period end of 407,515,824 (31 March 2025:
494,631,804).
* restated to reflect the ten for one share split.
7. TRANSACTION COSTS
Purchase transaction costs for the six months ended 30 September 2025 were
£277,000 (six months ended 30 September 2024: £204,000). Sales transaction
costs for the six months ended 30 September 2025 were £484,000 (six months
ended 30 September 2024: £340,000).
These expenses are charged to the capital column of the Income Statement and
included within Gains on investments.
8. RECONCILIATION OF OPERATING RETURN TO NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
(Unaudited) (Unaudited)
Six months ended Six months
ended
30 September 30 September
2025 2024
£’000 £’000
Gains before finance costs and taxation 48,187 9,508
Less: capital gains before finance charges and taxation (43,728) (1,740)
Revenue return before finance charges and taxation 4,459 7,768
Expenses charged to capital (5,975) (7,751)
(Increase)/decrease in other debtors (29) 226
Decrease in other creditors and accruals (97) (3,754)
Net taxation suffered on investment income (317) (825)
Net cash outflow from operating activities (1,959) (4,336)
9. PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks facing the Company are listed in the Interim Management
Report. An explanation of these risks and how they are managed is contained in
the Strategic Report and note 16 of the Company’s Annual Report & Accounts
for the year ended 31 March 2025.
10. COMPARATIVE INFORMATION
The condensed financial statements contained in this half year report do not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half years ended 30 September 2025 and
30 September 2024 has not been audited or reviewed by the
Company’s auditor.
The information for the year ended 31 March 2025 has been extracted from the
latest published audited financial statements of the Company. Those financial
statements have been filed with the Registrar of Companies. The report of the
auditor on those financial statements was unqualified, did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying the report, and did not contain statements under
either section 498 (2) or 498 (3) of the Companies Act 2006.
Earnings for the first six months should not be taken as a guide to the
results for the full year.
Glossary of Terms and Alternative Performance Measures (“APMs”)
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative Investment Fund
Manager (“AIFM”) and depositary to manage and oversee the operations of
the investment vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a fiduciary duty
to shareholders.
BENCHMARK
The performance of the Company is measured against the MSCI World Health Care
Index on a net total return, sterling adjusted basis. (Please also see the
Glossary).
The net total return is calculated by reinvesting dividends after the
deduction of withholding taxes.
LARGE CAP BIOTECH
Biotechnology company with fully integrated discovery, development and
commercial capabilities and considered sustainably profitable.
LARGE CAP PHARMA
Global, multinational pharmaceutical companies with fully integrated
discovery, development and commercial capabilities.
DISCOUNT OR PREMIUM
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and then
dividing by the net asset value per share. It is usually expressed as a
percentage (%) of the net asset value per share. If the share price is higher
than the net asset value per share the result is a premium. If the share price
is lower than the net asset value per share, the shares are trading at a
discount.
EMERGING BIOTECH
Biotechnology company that does not fit the criteria of Large Cap Biotech,
ranging from early-stage development to newly profitable.
EQUITY SWAPS
An equity swap is an agreement in which one party (counterparty) transfers the
total return of an underlying equity position to the other party (swap holder)
in exchange for a one-off payment at a set date. Total return includes
dividend income and gains or losses from market movements. The exposure of the
holder is the market value of the underlying equity position.
Your Company uses two types of equity swap:
* funded, where payment is made on acquisition. They are equivalent
to holding the underlying equity position with the exception of additional
counterparty risk and not possessing voting rights in the underlying; and,
* financed, where payment is made on maturity. As there is no
initial outlay, financed swaps increase economic exposure by the value of the
underlying equity position with no initial increase in the investments value
– there is therefore embedded leverage within a financed swap due to the
deferral of payment to maturity.
The Company employs swaps for two purposes:
* To gain access to individual stocks in the Indian, Chinese and
other emerging markets, where the Company is not locally registered to trade
or is able to gain in a more cost efficient manner than holding the stocks
directly; and,
* To gain exposure to thematic baskets of stocks (a Basket Swap).
Basket Swaps are used to build exposure to themes, or ideas, that the
Portfolio Manager believes the Company will benefit from and where holding a
Basket Swap is more cost effective and operationally efficient than holding
the underlying stocks or individual swaps.
GENERICS
Any therapeutics company, domestic or global, that focuses a majority of its
efforts (not necessarily 100%) on developing and selling generic and/or
biosimilar prescription and/or OTC products.
LEVERAGE
Leverage is defined in the AIFMD as any method by which the AIFM increases the
exposure of an AIF. In addition to the gearing limit the Company also has to
comply with the AIFMD leverage requirements. For these purposes the Board has
set a maximum leverage limit of 140% for both methods. This limit is expressed
as a percentage with 100% representing no leverage or gearing in the Company.
There are two methods of calculating leverage as follows:
The Gross Method is calculated as total exposure divided by Shareholders’
Funds. Total exposure is calculated as net assets, less cash and cash
equivalents, adding back cash borrowing plus derivatives converted into the
equivalent position in their underlying assets.
The Commitment Method is calculated as total exposure divided by
Shareholders’ Funds. In this instance total exposure is calculated as net
assets, less cash and cash equivalents, adding back cash borrowing plus
derivatives converted into the equivalent position in their underlying assets,
adjusted for netting and hedging arrangements.
See the definition of Equity Swaps (in the Glossary) for more details on how
exposure through derivatives is calculated.
As at As at
30 September 2025 31 March 2025
Fair Value Exposure* Fair Value Exposure*
£’000 £’000 £’000 £’000
Investments 1,415,959 1,415,959 1,673,659 1,673,659
OTC equity swaps 39,361 264,656 (23,791) 207,565
1,455,320 1,680,615 1,649,868 1,881,224
Shareholders’ funds 1,444,263 1,679,346
Leverage % 16.4% 12.0%
* Calculated in accordance with AIFMD requirements using
the Commitment Method
MSCI WORLD HEALTH CARE INDEX (THE COMPANY’S BENCHMARK)
The MSCI information (relating to the Benchmark) may only be used for your
internal use, may not be reproduced or redisseminated in any form and may not
be used as a basis for or a component of any financial instruments or products
or indices. None of the MSCI information is intended to constitute investment
advice or a recommendation to make (or refrain from making) any kind of
investment decision and may not be relied on as such. Historical data and
analysis should not be taken as an indication or guarantee of any future
performance analysis, forecast or prediction. The MSCI information is provided
on an “as is” basis and the user of this information assumes the entire
risk of any use made of this information. MSCI, each of its affiliates and
each other person involved in or related to compiling, computing or creating
any MSCI information (collectively, the “MSCI Parties”) expressly
disclaims all warranties (including, without limitation, any warranties of
originality, accuracy, completeness, timeliness, non-infringement,
merchantability and fitness for a particular purpose) with respect to this
information. Without limiting any of the foregoing, in no event shall any MSCI
Party have any liability for any direct, indirect, special, incidental,
punitive, consequential (including, without limitation lost profits) or any
other damages. (www.msci.com)
NET ASSET VALUE (NAV) TOTAL RETURN (“APM”)
The theoretical total return on shareholders’ funds per share, reflecting
the change in NAV assuming that dividends paid to shareholders were reinvested
at NAV at the time the shares were quoted ex-dividend. A way of measuring
investment management performance of investment trusts which is not affected
by movements in discounts/premiums.
Six months to Year to
30 September 31 March
2025 2025
(p) (p)
Opening NAV per share 339.5 381.1
Increase/(decrease) in NAV per share 15.4 (41.6)
Closing NAV per share 354.4 339.5
% change in NAV per share 4.4% (10.9)
Impact of reinvested dividends 0.6% 0.6%
NAV per share Total Return 5.0% (10.3)%
ONGOING CHARGES (“APM”)
Ongoing charges are calculated by taking the Company’s annualised ongoing
charges, excluding finance costs, taxation, performance fees and exceptional
items, and expressing them as a percentage of the average daily net asset
value of the Company over the year.
Six months to 30 September 2025 One year to 31 March 2025
£’000 £’000
AIFM & Portfolio Management fees 6,289 15,307
Other Expenses 665 1,252
Total Ongoing Charges 6,954 16,559
Performance fees paid/crystallised – –
Total 6,954 16,559
Average net assets 1,527,155 1,984,818
Ongoing Charges (annualised) 0.9% 0.8%
Ongoing Charges (annualised, including performance fees paid or crystallised during the period) 0.9% 0.8%
PERFORMANCE FEE
Dependent on the level of long-term outperformance of the Company, a
performance fee can become payable. The performance fee is calculated by
reference to the amount by which the Company’s NAV performance has
outperformed the Benchmark.
The fee is calculated quarterly by comparing the cumulative performance of the
Company’s NAV with the cumulative performance of the Benchmark since the
launch of the Company in 1995. Provision is also made within the daily NAV per
share calculation as required and in accordance with generally accepted
accounting standards. The performance fee amounts to 15.0% of any
outperformance over the Benchmark (see Company’s Annual Report & Accounts
for the year ended 31 March 2024 for further information).
In order to ensure that only sustained outperformance is rewarded, at each
quarterly calculation date any performance fee payable is based on the lower
of:
i) The cumulative outperformance of the
investment portfolio over the Benchmark as at the quarter end date; and
ii) The cumulative outperformance of the
investment portfolio over the Benchmark as at the corresponding quarter end
date in the previous year.
The effect of this is that outperformance has to be maintained for a 12 month
period before the related fee is paid.
In addition, a performance fee only becomes payable to the extent that the
cumulative outperformance gives rise to a total fee greater than the total of
all performance fees paid to date.
SHARE PRICE TOTAL RETURN (“APM”)
Return to the investor on mid-market prices assuming that all dividends paid
were reinvested.
Six months to One year to
30 September 31 March
2025 2025
(p) (p)
Opening share price 297.5 335.0
Increase/(decrease) in share price 30.5 (37.5)
Closing share price 328.0 297.5
% change in share price 10.3% (11.2)%
Impact of reinvested dividends 0.6% 0.7%
Share price Total Return 10.9% (10.5)%
SPEC PHARMA
Any other therapeutics company that does not fit the criteria of Large Cap
Pharma that develops and sell pharmaceutical products, often focused on a
limited number of therapeutic areas (or technologies), with a domestic and
sometimes global footprint.
Frostrow Capital LLP
Company Secretary
12 November 2025
- ENDS -
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