Future Healthcare • Equities

Research evidence excerpt

Future Healthcare • Equities

Future Healthcare ● Equities

July 2026

We think that value names will be in focus, but only if confidence in catalysts and turnaround

starts building.

◆ GARP Biopharma are the most attractive plays for 2H26: We think that with multiples at

Stocks with manageable LOE

historical averages, stocks with manageable LOE and supportive catalyst paths areprofile and supportive

catalyst paths are positioned positioned to perform. We do not think that the market has the appetite to own “make or

to perform break” catalyst exposed names, or even names with a choppy catalyst path. In that context,

we think J&J and Abbvie are our preferred plays. Whilst AstraZeneca fits the GARP

template, we think the short-term catalysts (SERENA-4 and AVANZAR) are key overhangs

on the sentiment – we trim our target price but reiterate our Buy rating. We continue to see

Pelacarsen as a key risk for the bull case for Novartis and reiterate our Reduce rating.

◆ The ‘Netflix’ for obesity thesis remains unconvincing: We think the downward

Obesity drugs’ ‘Netflix-like’

momentum of pricing in the obesity space, generics in key markets, and frothy expectationssubscription model might see

greater patient churn with from oral drugs leaves us uncomfortable with the current valuation. Our forensic accounting

consumer cyclicality work raises a few questions regarding the patterns in working capital for Lilly, which

suggests that the underlying negative pricing dynamics might not be fully appreciated.

We think that the persistence of these drugs, especially orals, can demonstrate consumer

cyclicality as direct-to-consumer accounts for over half of the US and over three-fourths in

the rest of the world. These drugs’ effects swiftly reverse when patients stop taking them,