Healthcare video series

Obesity Drugs GLP-1

1. What is GLP-1? Why do some people call it a miracle drug?

GLP-1’s full name is Glucagon-like peptide-1. It is a hormone, secreted by the small intestine, which stimulates insulin release from pancreas and also inhibits glucagon secretion. Glucagon is a hormone that raises blood sugar levels. GLP-1 can also slow down gastric emptying, which helps regulate blood sugar levels and reduces appetite. However, native GLP-1 has a short half-life. GLP-agonists mimic the action of GLP-1. They can enhance insulin secretion, suppress glucagon release, and slow gastric emptying, all of which contribute to better blood sugar control in people with diabetes. Additionally, these drugs act on the brain’s appetite centers, reducing appetite and increasing feelings of fullness, leading to decreased food intake and weight loss. On top of diabetes and obesity, Novo Nordisk Study suggested that GLP-1 drugs can potentially help reduce the risk of cardiovascular disease, chronic kidney disease and sleep apnea etc. That is why some people like to call the GLP-1 the miracle drug.

1. How big is this this GLP-1 market and are any competitor drugs available?

Given the large size of the diabetes and obesity population in the world, there is a big commercial GLP-1 market. Taking the United States as an example, some research estimates that GLP-1 revenue could reach $90bn annually by 2030 from these alone. This is only US and does not include the potential use of these drugs for other diseases in the future. Therefore, we expect a very sizable market for the GLP-1 category. There are already existing GLP-1 drugs in the market approved for diabetes and obesity respectively.

1. How can I invest in GLP-1 opportunities?

There are several different ways to invest in GLP-1. Firstly, investors can invest in pharmaceutical companies that own existing GLP-1 drugs, which have been driving revenue growth for these companies. Secondly, there are several other biopharma companies with ongoing clinical studies that may compete with existing GLP-1 drugs in the future. We expect to see more competition in this category. Product differentiation will depend on factors such as efficacy, whether they are oral or injectable, side effect etc. Lastly, investors can explore opportunities in supply chain companies that provide components to GLP-1 drugs.

Oncology & Cancer Treatment

1. What are the most common types of cancer and related causes?

According to WHO data, cancer is a leading cause of death worldwide, accounting for nearly 10 million deaths in 2020, or nearly one in six deaths. The most common cancers are breast cancer, followed by lung cancer and colon & rectum cancers. Cancer can be caused by various factors, including tobacco use, high body mass index, alcohol consumption, low fruit and vegetable intake, and lack of physical activity etc. Infections such as HPV and hepatitis are other common factors leading to cancer, especially in middle to low income countries.

1. What are the latest cancer therapies and innovations?

Given the rising cancer rate, oncology is a significant category in biopharma space. Oncology is in fact the largest R&D targeted area globally. Hence we have seen quite a few innovative cancer therapies in the past couple of years. One technology we like is Antibody-Drug Conjugates (ADC), which are targeted therapies that link a cytotoxin to an antibody, allowing for the delivery of cancer-killing medicine directly to cancerous cells without impacting healthy cells. There are existing, approved products using this technology that have shown excellent results. Another innovative approach is Bispecific Antibodies, which are therapies that bind 2 unique antigens, allowing for less toxic and more efficient killing of tumor cells compared to monoclonal antibody treatments. Looking ahead, there are many new oncology technologies are under study so this will continue to be a very innovative space.

1. What are the investment opportunities in this area?

We like to invest in companies with strong R&D capabilities that can develop best in class cancer therapies. For example, companies leading in ADC technology, that have already demonstrated their expertise in this area from existing products and are also applying the same technology to other types of cancers, can be quite interesting. These companies can have the cash flow to fund their research and potential future growth. A rigorous bottom-up research approach is needed to invest in oncology companies, as the fundamentals heavily depend on the quality of those products and pipeline studies.

Besides cancer treatment, diagnostic technology and monitoring devices are also important. Better diagnostic technologies can help detect cancer at early stage, which significantly improves the recovery rate. Therefore we like to explore opportunities with MedTech companies that excel in this area.

Metabolic Syndrome

1. What is Metabolic Syndrome and how prevalent is it today?

Metabolic Syndrome is a cluster of conditions that occur together, increasing the risk for cardiovascular diseases and diabetes. These conditions may include obesity, high blood pressure, high blood sugar and abnormal cholesterol or triglyceride levels. According to WHO data, the top two causes of death globally in 2019 were Ischaemic heart disease and Stroke. Hence Metabolic Syndrome, if not managed well and in time, can be quite dangerous However, we have been seeing an increasing trend in the prevalence of metabolic syndrome in recent years. Based on US data from medical journal JAMA, the prevalence increased from 32.5% to 36.9% between 2011 to 2016. Even among young adults under 40, the ratio increased to 21.3%.

1. How can people manage Metabolic Syndrome?

The biggest priority is prevention. Healthy habits can have a big impact on maintaining a healthy weight and normal blood sugar, lipid levels and blood pressure. Once present, metabolic syndrome can be treated with loss of excess weight, improved diet, more exercises, and, when necessary, with medications.

1. What are the investment opportunities in this area?

There are various investment opportunities related to Metabolic Syndrome and the diseased caused by it. We have already talked about GLP-1 targeting obesity and diabetes, but there are many more drugs for cholesterol and hypertension etc. Additionally, medical devices play an important role in this field. For example, devices like a continuous glucose monitor, can help diabetes patients constantly monitor their blood sugar levels, aiding in diagnostics with minimal interference to their daily lives. Cardiovascular disease surgical devices are also worth considering, as many patients may ultimately require surgery. We are interested in exploring opportunities with devices companies that are innovation leaders in this field, including those providing minimally invasive surgical devices and surgical robots etc. We see continuous innovation in this area leading to better devices that can possibly improve pain, complications, and recovery time for patients.

How to invest in healthcare sector

1. Why invest in healthcare?

Healthcare is a unique sector within the equity market that we call a defensive and quality growth sector, which contains a combination of resilience with solid long-term growth. Healthcare has been one of the highest earnings growth sectors over the past two decades, driven by an aging global population and continuous innovation. The demand in healthcare is steadily growing and is less impacted by macroeconomic factors. This combination of higher growth compared to the broader equity market and lower volatility makes healthcare an ideal asset class for investors.

1. What is the benefit of an active approach to healthcare investment?

Healthcare is a broad universe with four subsectors, namely pharmaceuticals, biotechnology, medical devices & supplies, and healthcare service providers. Historically, there has been constant subsector rotations and stock dispersions within the sector, highlighting the importance of active management to gain alpha. We believe a balanced portfolio across all sub-sectors can help investors capture the best opportunities within the sector. For example, we increased our pharma exposure in 2022 as this subsector was less impacted by the supply chain disruption and components shortage / inflation issues during the period, which helped our portfolio’s resilience in the tough environment that year. Additionally, the fundamentals of healthcare companies are closely correlated with products patent cycle, clinical trial results, new product approval processes, commercialization, regulatory impacts, mergers and acquisitions etc. Active management can help navigate such individual companies’ moving factors based on rigorous research. For example, acknowledging the possible revenue drop due to patent expiration / potential price cut for select biopharma names, we managed down such companies’ exposure, which contributed to our relative performance year to date.

1. Why BlackRock for healthcare investing?

BlackRock global Healthscience strategy has over 20 years outstanding track record. The strategy is managed by a team of five Ph.Ds and one M.D, all of whom possess extensive scientific and investment experience, including the lead portfolio manager who has 30 years of experience in healthcare research and investing. We believe such knowledgeable background and experience enables us to conduct in depth research on healthcare companies and identify the best opportunities for our investors. Lastly, the strategy has a proven and consistent track record that ranks in the top quartile among peers from both a short-term and long-term perspective.