As the year progressed, 2025 reassured investors that the sector clouds gathering into the New Year were out of touch with fundamental realities. Historically attractive valuations also compelled acquirers to act in force, lending additional assurances and ultimately leading to a banner year for M&A. While the healthcare sector ends the year on a firmer footing, we would argue that until more recently the market’s attention has been elsewhere. As funding and the returns on technology-related capital investments are increasingly being called into question, healthcare would seem a natural home for growth investors looking to diversify.

Looking ahead, we see the healthcare sector as a prime beneficiary of artificial intelligence-enabled technologies when it comes to furthering innovation, but also improving access and affordability.

Although sentiment may have improved, exchange-traded fund flows attest that mainstream investors are not exposed to the healthcare area in any significant way. Meanwhile, the sector continues to innovate, as evidenced by stunning clinical data, regulatory approvals and commercial launches exceeding expectations. Though equity investors may have missed the related memo, large biopharmaceutical companies seeking to replenish the tens of billions of dollars of revenues that will likely fall to generic competition over the next few years have clearly wasted little time putting cash to work.

Looking ahead, we see the healthcare sector as a prime beneficiary of artificial intelligence-enabled technologies when it comes to furthering innovation, but also improving access and affordability, as waste and inefficiencies are reduced allowing for more intelligent and prospective healthcare investment around the globe.  As the US looks to level the investment playing field, there will be opportunity for others to step up to the plate. Irrespective of geography, our investments will naturally follow wherever innovation abounds and the best and brightest companies are enabled to lead.