Baron Health Care Strategy

Eli Lilly and Company (LLY) is a multinational pharmaceutical company developing drugs in diabetes, oncology, immunology, and neuroscience. The company is currently best known for developing and selling incretin analogue GIP/GLP-1 medications for diabetes and obesity. 
We are investors in Lilly given its focus on industry-leading growth categories like diabetes, obesity, and oncology. Leading GLP-1 drugs Mounjaro and Zepbound offer superb blood sugar control for diabetics, can drive 20%-plus weight loss in obese patients, and improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. We think GLP-1 drugs will become the standard of care for both diabetes and obesity, representing a $150 billion-plus market. 

Mettler-Toledo International Inc. (MTD) is a leading provider of precision instruments and services for customers in the life sciences, food, and chemical industries, among others.  
Mettler-Toledo has a track record of consistent growth. The company has strong brand recognition, customer diversification, pricing power, and margin expansion opportunities. We think the business has attractive financial characteristics, including high returns on capital, minimal capital requirements, and solid free cash flow generation, which it uses to repurchase its stock. We believe the management team is an excellent steward of capital and skilled at developing sales and marketing initiatives to enhance growth.

Johnson & Johnson (JNJ) is a leading global healthcare company focused on innovative medicine and medical technologies. Founded in 1886, it develops treatments for complex diseases (oncology, immunology) and medical devices for surgery and vision. They are widely known for their commitment to global health. 
Johnson & Johnson has been actively optimizing its portfolio by separating and spinning off lower-growth, less attractive businesses while investing in higher-growth, innovative segments. This has resulted in a portfolio with accelerating growth, which we believe supports a higher valuation multiple. The business is growing 5–7% in the near term and could accelerate to double-digit revenue growth by the end of the decade, driven by multiple catalysts in the company’s Innovative Medicine segment and stable growth in MedTech.

Argenx SE (ARGX) is a biotechnology company launching Vyvgart (efgartigimod) in myasthenia gravis and chronic inflammatory demyelinating polyneuropathy, while developing the drug for additional autoantibody-driven autoimmune conditions. 
Efgartigimod has potentially broad applicability in ameliorating overactive antibody-based diseases. Efgartigimod is a true "pipeline in a product," where the product itself is the platform, as it has the potential to be used against a diverse range of diseases—something that is rarely achieved in the biotechnology space. We expect the share price to increase as argenx proves its product’s effectiveness in multiple autoantibody disorders.

Thermo Fisher Scientific Inc. (TMO) is the world's largest life sciences tools company. Thermo Fisher provides analytical instruments, laboratory equipment, software, services, consumables, and reagents for life sciences research, manufacturing, analysis, discovery, and diagnostics.
Thermo Fisher's $240 billion addressable market is growing 4% to 6% per year due to favorable demographics, scientific advances, new technology, and increased regulations. Long-term, management expects to grow revenue on an organic basis by 7% to 9% annually, driven by share gains and exposure to high-growth segments of the market. Competitive advantages include industry-leading scale, commercial infrastructure, e-commerce platform, supply chain capabilities, and R&D investment. The market is fragmented, offering opportunities to create shareholder value through M&A.

Roivant Sciences Ltd. (ROIV) is a biotech company developing novel drugs across multiple therapeutic areas. It in-licenses or acquires deprioritized assets from larger pharmaceutical companies, housing each in standalone entities while centralizing capital allocation and shared resources at the parent level.
We’re excited about Priovant/Pfizer’s brepocitinib, launching in dermatomyositis and showing promise in cutaneous sarcoidosis, non-infectious uveitis, and other autoimmune diseases. We think it has promise in a range of oter autoimmune conditions. Immunovant (IMVT) is developing a next-gen FcRn inhibitor for Graves’ disease, which could potentially unlock a multi-billion-dollar market. Both teams have strong track records in in-licensing underappreciated assets, and we look forward to mosliciguat data in PH-ILD later this year.

Teva Pharmaceutical Industries Ltd. (TEVA) is a global pharmaceutical company best known for their generic medicines, and is increasingly expanding its innovative therapies.
We believe Teva’s branded portfolio and pipeline are underappreciated. Innovative drugs now drive ~50% of profits and are the key growth engine. Austedo is seeing strong uptake in tardive dyskinesia, Ajovy is gaining share in the chronic migraine market, and Uzedy has launched well in schizophrenia, with long-acting olanzapine upcoming. We are optimistic about the acquisition of ecopipam for pediatric Tourette’s. Pipeline assets include duvakitug for inflammatory bowel disease, DARI for asthma, and TEV-408 for vitiligo and celiac disease, targeting underserved markets.

UnitedHealth Group Incorporated (UNH) is a diversified health and well-being company with around $450 billion in revenue that operates across four segments: United Healthcare, Optum Health, OptumInsight, and OptumRX. The company serves 134 million individuals in all 50 states and more than 125 countries.
At twice the size of the next largest health maintenance organization by revenue, UnitedHealth is the leading health care franchise in the U.S. We believe it should continue to see solid growth and profitability, driven by positive demographic trends and its ability to manage costs by leveraging its size and scale, continuing its industry-leading technology investments, expanding its expertise in population health, and growing its portfolio of providers, all of which enables it to keep and effectively manage more of its health care spending in-house.

Welltower Inc. (WELL) is a $100 billion diversified health care owner and manager of senior housing, including assisted and independent living. Core to its strategy is to partner with top-tier operators and health systems while providing operators access to its proprietary data analytics platform.
We are optimistic about the prospects for Welltower given the substantial opportunity for cyclical recovery and continued secular growth in its senior housing business through occupancy and rent growth. The company also benefits from its proven ability to recycle capital at attractive rates of returns, premier health care platform, partnerships with top-tier operators, and well-respected management team focused solely on creating value on a per-share basis.

RadNet, Inc. (RDNT) is the leading U.S. provider of freestanding outpatient diagnostic imaging services and related IT solutions, based on the number of locations and annual imaging revenue, with 366 centers across key markets including Arizona, California, Delaware, New Jersey, New York, and Texas.
RadNet’s growth is driven by aging U.S. demographics, greater use of imaging in disease diagnosis and treatment, and the shift from inpatient imaging to lower-cost outpatient settings. The company builds leading positions in regional markets to leverage operational efficiencies through relationships with payors, radiology groups, and referring physicians. RadNet’s multi-modality strategy diversifies revenue streams and reduces reimbursement risk, while its AI capabilities enhance radiologic reads, supporting earlier disease detection and improving physician productivity.

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