£2.3bn trust Worldwide Healthcare in rude health

Investment trust Worldwide Healthcare published its annual results four days ago.

A share price fall of nearly five per cent for the year to the end of March was compensated in part by a healthy 17 per cent uplift in the annual dividend.

Although the trust’s chairman admitted the stock market was ‘challenging short-term’ as a result of higher interest rates and nagging inflation, he expressed confidence in the fund’s investment remit – seeking long-term returns from best-in-class healthcare companies.

The £2.3 billion stock market- listed fund is one of a handful of trusts that specialise in making money from companies in the global healthcare industry.

This is an investment theme that embraces the world’s largest pharmaceutical giants such as AstraZeneca and Pfizer – as well as companies involved in leading edge medical technology such as robotic surgery and the use of electrical pulses to treat those with an irregular heart rate (atrial fibrillation).

While Worldwide Healthcare’s investment record over the past five years is not as strong as rival trusts such as Polar Capital Global Healthcare and Bellevue Healthcare, it has generated returns of 31 per cent over this period. 

More interestingly, for potential investors, the trust’s managers share the boardroom’s confidence in the future. 

They believe a combination of new drugs, exciting new medical procedures and takeovers within the sector will help deliver attractive returns.

Worldwide Healthcare is managed by OrbiMed, a New York- based investment house that specialises in healthcare. Aside from Worldwide Healthcare, it runs trust Biotech Growth, also listed on the London Stock Exchange.

Sven Borho, a founding partner of OrbiMed, is joint manager along with Trevor Polischuk. He says: ‘Right from the trust’s start in 1995, the focus has been on identifying the best healthcare investments across the globe – the absolute best, located anywhere. This has proven to be the best approach and we will not deviate from it.’

Currently, the portfolio comprises 61 stocks, most listed either in the United States or Europe. There are familiar names among its top holdings such as France-based Sanofi, Novo Nordisk (Denmark) and Swiss pharmaceutical giant Roche. Borho says some of these big pharma companies could see revenues jump if sales for new drugs are as strong as anticipated.

For example, a few days ago, the UK Government announced the launch of a pilot scheme to trial wider access to slimming jab Wegovy, manufactured by Novo Nordisk. Borho says sales of Wegovy; Sanofi’s treatment for eczema (Dupixent); and AstraZeneca’s cancer drug Enhertu could generate sales revenues in excess of £8 billion. 

Yet Borho is also keen to invest in younger businesses, primarily biotech focused, that could see their valuations rise sharply if sales for newly developed treatments take off – or if they are subject to a takeover from a bigger rival.

Recent purchases made by the trust include a stake in US-based Apellis Pharmaceuticals, a company involved in the design of medicines targeting the proteins that lead to blindness.

‘The pharma giants are never as good as smaller companies when it comes to developing new drugs,’ says Borho.

‘It’s why takeovers of some of these innovators are inevitable. It’s a theme we think will continue throughout the year and one we hope we can make investment returns from.’

Worldwide Healthcare pays dividends twice a year. In the last financial year, they totalled 31pence and compare to a share price of £32. 

The stock market ID code is 0338530 and the ticker is WWH. Annual fund charges total 0.89 per cent.

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