abrdn Healthcare Closed-end funds - December 2024

In this episode, Jason Akus joins Mike Taggart to discuss an overview of the healthcare investment landscape and provide an update on our four healthcare closed-end funds. 

Transcript

Welcome to the latest podcast for abrdn’s health care closed end funds. I'm Mike Taggart, Aberdeen's head of closed end fund investor relations. Today will be looking at health care in general, and our four health care funds are abrdn Health Care Investors, ticker symbol HQH. abrdn Life Sciences Investors, ticker  HQL, abrdn Healthcare Opportunities Fund, ticker symbol THQ and abrdn World Health Care Fund, THW. 

I'm very pleased to welcome Jason Akus, abrdn’s head of health care investments and the portfolio manager on all four of these funds. Jason, thank you so much for joining us today. 

Hey, Mike. Really great to be here. I always enjoy discussing topics on health care and health care investing and talking about our funds. 

For sure. Health care has been, particularly interesting, especially in light of, you know, the recent election and, you know, all the potential changes that may be going on.

Absolutely. Well, you just brought up the recent election and significant changes. What's your take? You know, what will a second Trump administration bring to the health care industry in the US? Yeah. Really good question. You know, I think it's important to recognize that despite some of the supposed controversial takes and some of the nominees to, say, the Health and Human Services or the FDA, the CDC or the NIH, I think the plain and simple bottom line is that really nothing big is anticipated in terms of sweeping health care policy changes.

You know, there's always some type of concern in the back of everyone's mind that something could come out of left field. But we think there are new administration will have their focus in energy on other things, and health care won't see any major changes. You know, if you recall, in Trump's First Presidency, there were a lot of efforts to undo Obamacare, but it just proved to be a really significant challenge to try to undo it.

And I think it just kind of seems unlikely the administration, new administration will want a repeat of that. You know, independent of the election. You know, there's been always these ongoing, concerns and pushback on drug pricing and the way that health care gets administered. You know, there's been several ongoing legislations around PBM transparency and PBMs being the pharmacy benefit managers who are kind of the middlemen in the delivery of drugs from pharma companies to end users.

But it has been a significant focus of the government. And just kind of in this last week, we've seen a bunch of headlines, just recently put some pressure on managed care companies, stocks, just on these kind of potential changes. So you think that that is one area that could see some negative influence on from us? Yeah.

And you know, and I don't think this is necessarily a, you know, a Republican Trump type of, you know, directive is is something that just, you know, it's by has bipartisan support. You know, I think, you know, saying we're not really expecting anything major. I think the most significant piece of health care legislation was actually passed a few years ago in 2022.

And that was, we called the Inflation Reduction Act or the IRA. It's a big, you know, Lincoln part, landmark, piece of legislation through the from the Biden administration. But in terms of health care, I think what significant is that? It did aim to lower prescription drug prices for Medicare beneficiaries. And so one of those key provisions was that Medicare can actually start negotiating on price.

So this is a pretty significant change. But the one area that Republicans and Democrats both agree on is that drug prices are probably relatively high in the US. And, you know, it's something they can both get behind in. Do you think that that is what has been influencing the market performance of the health care sector since the election?

 Yeah. You know, it's healthcare. You know. Since the election, was it November 6th has notably underperformed the broader equity markets. You know, up through as looking at the, numbers up through December 12th since the election, you know, the broader S&P 500 is up 5%. But when you look at kind of broad indexes of health care, it's down 4%.

And if we look at biotech that's down actually about 6%. So some pretty significant relative underperformance. You know, it wasn't really until Trump's nomination of RFK junior to HHS when health care really started to underperform in actually, the first few days, after the election, health care was keeping up with the S&P 500. But with this nomination, I think it kind of spooked people, given his so-called controversial stances on, say, vaccines and, you know, questions about food safety and additives.

But I believe, you know, kind of over the ensuing weeks, a lot of those concerns have been dissipated, especially with, you know, the, the person who's nominated for the FDA. And there's actually, I think, a strong push to actually speed the drug approval process and get certain medications and, therapies actually to market quicker. Right, because you think that the regulatory easing, you know, that the Republican Party in general is talking about would be helpful, maybe to the biotech industry?

Yeah, absolutely. You know, I think the is kind of pro-business and biotech is a very and pharmaceutical industry is, you know, a source of, you know, important jobs, high paying jobs here in the US. And it's, you know, I think when we look out over the next few years, it's actually going to end up being a net positive for the space and investing in the space.

Okay. Excellent. Well, so moving on to a different topic with a different time horizon. And for years, you know, artificial intelligence gets a lot of headlines and it's poised to revolutionize healthcare. Right. So what are your thoughts on the long term implications of AI in this space? Yeah, it's it's super interesting topic, obviously. But I has, a lot of potential to change a lot of aspects, you know, in life and work and companies.

And, you know, certainly within health care, it has potential to really revolutionize it. When I think about AI in healthcare, I think we kind of have to break it into kind of two different types of topics in its application. First is just using AI in the delivery of medicine, you know, the way we kind of, go go to our doctor and receive care.

You know, I think one of the longer term implications to consider is that, you know, it can improve diagnostics and personalized medicine. You know, I can analyze vast amounts of data very quickly and accurately, leading to, you know, earlier and potentially more precise diagnoses. You know, this can pave the way for personalized medicine, where treatments are tailored to individual patients based on their genetic makeup and other factors.

I you know, this is not just unique to healthcare, but it has the potential to enhance the efficiency and also reduce the costs of administrating, health care. You know, can it streamline administrative tasks, optimize resource allocations, automate routine processes. And so this will, you know, improve the efficiency of the delivery of healthcare. Yeah, you can keep going on.

But, you know, ultimately, I think I will improve patient outcomes by providing those real time insights and predictive analytics. You know, make health care providers more informed on their decisions, leading to better patient outcomes. So there is there's a lot of things to consider. You know, the benefits for AI, and and one of those things to consider though is the ethical considerations.

You know, but as I was just kind of describing as it kind of gets rolled out into delivery of health care, you know, we got to make sure that, you know, we ensure that, you know, patient privacy and confidentiality is protected. You know, I, I involves handling vast amounts of sensitive patient data. So, you know, ensuring that this data is kept safe and secure and confidential, I think is paramount to, maintaining patient trust and kind of complying with, you know, legal standards.

 You know, patients should be fully informed about how AI is used in their care and potential risks and benefits, you know, and just kind of on the privacy thing is also includes understanding how their data can be used, and maybe ensuring that you have an option to opt out if you so choose. You know, another consideration is kind of bias and fairness.

You know, you know, it can, you know, AI systems can inadvertently, perpetuate or even exacerbate, existing biases in the healthcare system. You know, if the data used to train AI models is biased, the outcomes could be disproportionately affect certain groups, leading to different, you know, health disparities. So there's a lot to think about as it gets gets rolled out for sure.

Well, speaking of a lot to think about, you know, you've given us a lot to think about. I always think, you know, speaking with you. It's always very informative. The companies you invest in are always, you know, very exciting cutting edge stuff. Especially on the biotech side. But even, you know, on the larger pharmaceuticals, just kind of you and your team's depth knowledge on these things.

You know, it's always just very exciting. So thank you very much for taking the time to speak with us today. And thanks for the update. Yeah, really appreciate it, Mike. And thank you, everyone for listening to this podcast. There are three convenient ways to learn more about our health care funds on the internet. Each fund has its own site. For Aberdeen Healthcare investors, visit abrdnhqh.com for abrdn Life Sciences investors visit abrdnhql.com, for abrdn Healthcare Opportunities Fund, visit abrdnthq.com, and for abrdn World Health Care Fund visit abrdnthw.com. Second, you can email us at Investor.relations@abrdn.com or give us a call at 1-800-522-5465. I'm Mike Taggart of abrdn. Thank you for listening.

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This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment, recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication, and do not necessarily reflect those of Aberdeen.

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The companies discussed in this podcast have been selected for illustrative purposes only, or to demonstrate our investment management style, and not as an investment, recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up, and investors make it back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates, and provide no guarantee of future results.