From AI to obesity drugs: investment trusts back the next wave of medical breakthroughs

James Harries, Co-Manager of STS Global Income & Growth Trust, which is in the Global Equity Income sector, said: “We have an 11% exposure to the healthcare sector because of its defensive qualities. It is a reliable safe haven during market downturns because people need medical care, prescription drugs and hospital services regardless of how well the broader economy is performing.”

Trevor Polischuk, Co-Manager of Worldwide Healthcare Trust, said: “One of the most exciting developments across our portfolio is the breadth of innovation taking place across healthcare today. In obesity and metabolic disease, growth is broadening beyond first-generation therapies. 

“Eli Lilly's next-generation pipeline keeps outperforming, and emerging names like Structure Therapeutics show real promise in oral treatments. In neuroscience, uniQure's gene therapy for Huntington’s disease marks a genuine breakthrough, with FDA alignment on its filing requirements clearing the way for submission this year. In oncology and precision medicine, we're backing companies at the diagnostic frontier: Natera and Guardant Health are using molecular and AI-driven tools to guide treatment decisions with a precision that wasn’t possible a few years ago. Together, these advances don't just promise better outcomes for patients, they're creating the substantial long-term value we look for across the portfolio.”

James Douglas, Fund Manager of Polar Capital Global Healthcare Trust, said: “The most exciting themes that we are focused on in the near and medium term are access and affordability, emerging markets and AI/machine learning.

“Access and affordability is an important theme given the pressure on global healthcare systems that are looking to treat more people for less money without compromising the quality of care. There are many ways to play this theme, with generic manufacturers being one of them. Although all are built differently, emerging markets have some common ground in terms of ageing demographics, rising disposable incomes and increasing investment in healthcare access/infrastructure. Innovation is also a key consideration, with the Chinese biotechnology sector really coming to prominence.

“Artificial intelligence and machine learning technology overlays are being used in areas such as radiology and imaging to enhance the quality of diagnostic images. The technologies should also be useful in areas such as revenue cycle management, contract research for clinical trials, robotic surgery and care coordination.”

GLP-1s: is this just the beginning?

James Harries, Co-Manager of STS Global Income & Growth Trust, said: “We have an investment in Novo Nordisk, a leader in anti-obesity medications, which we made late last year off the back of a 70% decline in its share price. We had been monitoring the stock for some time and felt the price dip reflected short-term concerns rather than lasting issues, so we took the opportunity to invest at a lower level. 

“Weight-loss treatments such as GLP-1s have already had a tremendous positive impact, but we believe the category still has significant room to grow. It is reductive to think of GLP-1s simply as a drug market; in many respects, it increasingly resembles a traditional consumer market. As prices fall and new formulations become available, access should broaden substantially, supporting much wider adoption in both the US and globally. Novo remains the clear number two in a structurally attractive, underpenetrated global obesity market expected to grow significantly over the next decade.”

Trevor Polischuk, Co-Manager of Worldwide Healthcare Trust, said: “GLP-1s are still early in their growth curve, not near a peak. Drugs like Ozempic, Wegovy, Mounjaro and Zepbound already generated well over $100bn in sales in 2025, and we think the broader market keeps climbing from here. 

“The next leg comes from global roll-out, oral formulations, new indications, and broader payer access. The clinical evidence keeps building for benefits well beyond weight loss: cardiovascular, kidney, liver, sleep. Eli Lilly, the maker of Mounjaro and Zepbound, is our largest holding and our preferred way to play this theme, and we're also watching next-generation obesity candidates like Structure Therapeutics as that pipeline develops.”

The impact of AI and technology 

Trevor Polischuk, Co-Manager of Worldwide Healthcare Trust, said: “AI is enabling technology across the portfolio, but it’s not a standalone bet. In diagnostics, AI-driven tumour profiling and molecular testing through holdings like Guardant Health and Natera are making treatment decisions more precise. In drug development, AI is speeding up target discovery and trial design. And in medtech, it's sharpening imaging and surgical precision. Rather than a new category, AI is making the innovation we already back in oncology, diagnostics and biotech move faster.”

James Douglas, Fund Manager of Polar Capital Global Healthcare Trust, said: “The provision of healthcare is incredibly expensive, complex and data-rich. In many respects, it is an ideal industry for AI to add value through efficiency gains in the near term and enhanced clinical outcomes in the medium to long term. The potential to increase R&D productivity is also an enticing concept, with many companies adopting AI/machine learning technologies today. However, tangible evidence of accelerated R&D approval timelines is hard to come by, and perhaps a more measured approach to the investment implications is the right one to adopt today.”

What conditions could be treated in the next few years?

James Douglas, Fund Manager of Polar Capital Global Healthcare Trust, said: “The industry is experiencing high levels of productivity in areas such as auto-immune and cardiovascular disorders, oncology, respiratory diseases, vaccines and central nervous system conditions.”

Trevor Polischuk, Co-Manager of Worldwide Healthcare Trust, said: “Obesity remains the standout theme, still expanding beyond weight loss into cardiovascular, kidney, liver, and sleep benefits, with growth ahead from global roll-out, oral formulations and broader payer access. Alzheimer’s is the one to watch next after years overshadowed by obesity headlines. The pipeline progress is real, and we expect a step up in news flow as more data comes through.”

Risks of investing in the sector

Trevor Polischuk, Co-Manager of Worldwide Healthcare Trust, said: “Healthcare and biotechnology are innovation-driven sectors, so volatility is an inherent part of investing. Drug development is a lengthy, complex and highly regulated process, meaning clinical trial results, regulatory decisions or commercial execution can all have a significant impact on individual companies.”

James Douglas, Fund Manager of Polar Capital Global Healthcare Trust, said: “One of the biggest risks to investing in the healthcare and biotechnology sector would be clinical trial failures or disappointments. Capricious by nature, drug development is also expensive and complex with companies, ultimately, trying to prove or disprove theoretical hypotheses. Rewards can be high, but so can the risks which need to be managed accordingly.”

Healthcare’s overlooked opportunities

James Douglas, Fund Manager of Polar Capital Global Healthcare Trust, said: “The healthcare industry is incredibly diverse and can often experience wide dispersions of returns between subsectors. With that in mind, healthcare equipment is an area that appears to be currently out of favour due to a paucity of new products. The lifeblood of our industry is innovation and new product cycles are key to driving top-line growth and delivering attractive shareholder returns.”

Notes to editors

1. Performance data is share price total return to 31 July 2026.