Healthcare (Bionics and Biotech): Uncertainties remain, opportunities too.

Hot topics

Here is an update of the Hot Topics presented in our 2025 outlook.

Is the “Make America Healthy Again” possible?

In December, we argued that “Make America Healthy Again” would remain a slogan until appointments were confirmed; the trio we flagged - Robert F. Kennedy Jr. at HHS, Mehmet Oz at CMS, and Marty Makary at FDA - are all sworn in and already reshaping agencies. 

Kennedy’s first move was to dismiss the entire CDC vaccine-advisory panel, framing it as a trust-building reset but reviving anti-vax worries, while Makary is asking for extra real-world evidence packages that lengthen review clocks. The result is for now what we expected: diagnostics and tele-monitoring find themselves on the right side of policy, yet therapeutic developers now price in longer and less predictable FDA timelines. 

The positives between the lines are about AI in Healthcare and Orphan diseases. Both topics are getting a push within the FDA, with fast implementation and a potential new approval pathway. The rationale being, we need to lower the administrative burden overall and especially for diseases that have a big unmet need where speed is paramount, given that most biotechs running the trials have little runway. At atonra, we keep being overweight in both sectors.

Is UnitedHealthcare CEO's murder marking a significant turning point?

We warned that the shock murder of UnitedHealth’s chief executive could put America’s “middlemen” under the microscope. Six months later Luigi Mangione has been indicted and the Senate has scheduled June hearings on prior-authorisation practices. UnitedHealth’s new CEO has pre-emptively slashed average wait-times to under 24 hours for the most-denied codes. Nonetheless Capitol Hill attention has therefore moved from outrage to structural reform - exactly the inflection point we anticipated. 

The bipartisan Pharmacy Benefit Manager Transparency Act of 2025 was reintroduced in February and cleared Senate Commerce in April. It gives the FTC explicit power to fine Pharmacy Benefit Managers (PBMs) for opaque rebate or spread schemes and mandates detailed quarterly disclosures to plan sponsors. This is positive for Big Pharma and Big MedTech: the margin transfer from PBMs back to them is opening. To give a size estimate, a 2-4% uplift is plausible over a two- to three-year transition for Pharma, while Medtech is seeing closer to 1%. 

Obesity, the end of the hype? Not at all

Our call that obesity drugs were not a fading hype cycle has been borne out in capital commitments and pipeline news: Eli Lilly has more than doubled planned U.S. manufacturing spend to over $50bn, and Roche stepped in with a multi-billion collaboration around Zealand Pharma A/S’s amylin/GLP-1 combo CT-388. Demand still overwhelms supply, and the R&D baton is already passing to next-wave mechanisms, validating our forecast of a prolonged second act.

Big Pharma is under pressure

We anticipated Big Pharma would feel the patent cliff before turning to selective tuck-ins rather than mega-mergers. March delivered a brutal proof when half a dozen Stelara biosimilars launched at up to 90% discount - a level of discount never seen before for Biosimilars.

M&A frenzy is not yet in full panic mode, but is warming up. After a subdued 2024, with zero deals above $5bn, 2025 now has two. So far, 2025 is on par with 2021 for M&As commanding a premium of over 100%, and four deals away from the all-time-high of 2022. The digestion of the previous megadeals is finished, the FTC regulatory chill is lifting, the cost of capital remains enticing, and the election year is behind. 

This benefited our portfolio since we held positions in the two biggest M&As of the year, Intra Cellular Therapies and Blueprint Medicines .

U.S.-China tension put the MedTech supply chain at risk again

On tariffs, we feared a replay of the supply-chain stress of 2021-22; President Trump’s 10% universal duty that took effect on 5 April did fully deliver on that risk, with MedTech news outlets already reporting device makers scrambling to shift assembly to Mexico.  

Hospitals' short-term stockpiling is expected to lift Q2 sales, but executives expect a Q3 volume dip once new price lists take effect. The baseline tariff and even steeper “reciprocal” surcharges on China confirm the margin headwind we envisaged for the year. We estimate sector-wide margin compression in the 40-100 basis-point range for 2025. We began trimming our hardware positions back in November  shifting exposure towards software; a rebalancing we intensified further in February.

MedTech and Pharma will double down on Direct-To-Consumer

We said pharma and MedTech would double down on direct-to-consumer (DTC) once the economic case crystallised; by mid-2025, Pfizer's PfizerForAll DTC program is nationwide, and LillyDirect has already expanded into an Alzheimer’s diagnostic pathway to support Lilly's Alzheimer drug Kisunla, proving the model can move beyond lifestyle indications. Regulators are asking pointed questions about data-sharing, yet the consumer uptake we expected has materialised, reinforcing DTC as a structural rather than opportunistic channel.

Biotech-to-biotech deals taking the lead

Following the announcement of Sarepta’s USD 825mn cash-plus-equity alliance with Arrowhead, we hypothesized that the biotech-to-biotech deal format would become trendy. It turns out that through May, nearly a quarter of all disclosed partnerships were biotech-to-biotech. From January 1 to May 31, 173 R&D-stage asset or platform alliances were made across all life sciences; 41 involved two biotech companies.

The model is attractive because it keeps scientific culture intact while spreading risk across multi-asset platforms, and the arrow-in-the-quiver approach is drawing Wall Street support. With large pharma companies busy defending incumbents and trimming R&D budgets, expect this lateral financing channel to remain the sector’s solid source of non-dilutive capital. 

Catalysts

• Simpler U.S. regulation. RFK Jr’s first HHS white-paper promises “radical transparency” and FDA officials hints at faster approval pathways.

• MFN fails to pass. IRA is no longer the biggest threat to pharmaceutical earnings; the Most Favored Nation policy is.

• Biotech-to-biotech deal boom. It is playing out faster than expected. And with >40% of biotech <$1bn market cap trading at negative EV, these deals are enticing.

Risks

• Tariffs hurt margins. The 10 % baseline is now live; there is early evidence of price pass-through, but supply-chain relocations are costly and happening.

• Faster biosimilar uptake . Stelara biosimilars were launched at a 90 % discount, and the Humira share loss is accelerating, further revenue erosions from Big Pharma will drive capital outflow from the whole sector.

• Hospital wage pressure. Labour expense +5.6 % YoY; with average salary now $94.5k. With margins still thin while expenses grow > revenues, hospitals are at risk of lowering the procedure volumes, that would lead to lower MedTech sales.