Worldwide Healthcare (WWH) made an 89% return from a basket of biotechnology takeover targets in the 15 months to 30 June as mergers and acquisitions accelerated in the sector’s rebound from a three-year bear market.
Fund manager Sven Borho told shareholders at WWH’s annual general meeting in London this week that the impressive gain from the M&A basket had trounced the 8.4% rise in the MSCI World Healthcare index over the same period.
It follows a second quarter surge in the number of big pharmaceutical companies snapping up smaller drugs developers, a trend that had already made a 55.9% return for the trust in the year to 31 March, according to last month’s annual report.
WWH, a diversified healthcare portfolio that Borho runs with Orbimed co-manager Trevor Polischuk, held 14.5% or £189.4m of its assets in the basket. This contains around 50 stocks deemed most likely to be acquired by drugs giants looking to replenish their product pipelines.
The basket and its other holdings in listed biotech companies were the main contributors to the trust’s 10% investment return in the last financial year, powering it to beat the MSCI benchmark’s 1.8% rise, after losses in its positions in medical technology and healthcare services firms.
Speaking to QuotedData after the AGM, Borho (above) described the basket of swap derivatives assembled by investment bank Goldman Sachs as the “most actively managed part” of WWH’s diversified portfolio.
He said Orbimed Capital’s New York-based investment team would meet every six to eight weeks to review the holdings and keep pace with the dizzying pace of deal making that has seen 69 biotech companies snapped up for a total of $191bn in the year and a quarter to 30 June.
Borho said the positions in the basket ranged from 2% to 4% depending on liquidity and their upside potential.
At a headline level, WWH scored big wins in 2025/26 from the take-outs of portfolio holdings Apellis, Avidity Biosciences and Exact Sciences. However, the presence of the M&A basket means it has a much broader exposure to mergers and acquisitions.
Unique access
WWH is the only way investors can access the Orbimed M&A basket, meaning that while the trust is not as focused on the higher-risk, higher-return drug discovery sector as stable mate Biotech Growth (BIOG) or rivals International Biotechnology Trust (IBT) or RTW Biotech (RTW), which have all been boosted by a string of takeovers this year, it does have additional exposure to an M&A theme that has been a big part of biotech returns historically.
Orbimed launched the M&A basket in April 2022. Latest performance figures since then were not available but a review of WWH’s annual reports shows it has grown in importance, rising from 4.9% or £105.6m of assets in March 2023. It mostly buoyed returns during the tough years of 2022-2024 when rising interest rates and fears of US political interference dogged the healthcare sector.
The M&A basket is one of three areas where WWH’s managers use derivatives to gain exposure to a theme, such as medical device companies boosted by the craze for anti-obesity drugs, or to access otherwise inaccessible companies in China and India.
The AGM saw WWH’s chair Doug McCutcheon step down after 13.7 years on the board. Borho thanked McCutcheon, president of Longview Asset Management in Toronto, for his long stewardship, saying the trust had delivered a 438% total investment return, equivalent to 13.1% a year in that period, although he did not give a benchmark comparison.
“Mega blockbusters”
Borho expressed confidence in WWH’s prospects. He said ongoing M&A, a more market-friendly approach from regulators at the US Food and Drug Administration, and medical innovations in cancer treatment, anti-obesity and cardiovascular treatments would accelerate the advent of “mega blockbuster” drugs with annual sales over $50bn.
WWH shares stand on a narrow 4.8% discount to net asset value. In the 10 years to 30 June they achieved a total return of 123.5%, slightly lagging the 126.6% return of the MSCI World Healthcare index.
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