Company: HQL
Filing Date: 2025-12-08
Form Type: N-CSR
Source: 0001104659-25-119341
Chunk: 7

Company: abrdn Life Sciences Investors
Filing Date: 2025-12-08
Form: N-CSR
Chunk 7
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 that of the S&P 500 Index over the period due to the sector’s defensive nature. In addition, the nomination of Robert F. Kennedy Jr. to run the Department of Health and Human Services affected the healthcare sector’s returns shortly after the announcement. Subsequently, healthcare stocks faced headwinds from regulatory uncertainty, including proposed Medicaid work requirements and uncertainty in biotechnology regulation and funding. Although the Trump administration announced high tariffs on branded and patented pharmaceutical imports, the tariff rate implemented was lower than initially feared. Moreover, companies building manufacturing facilities in the U.S. were exempted, which helped to limit the policy’s perceived impact on the healthcare sector. Portfolio Review HQL is a fully equity strategy focused on therapeutics and enabling platforms. During the period we tilted further into SMID–cap biotechnology, deliberately leaning into higher–risk, smaller–cap opportunities where our analysts’ deep scientific diligence and clinical–regulatory experience try to identify asymmetric opportunities tied to clear milestones (late–stage readouts, label expansions, or partnership paths). As valuations later recovered in parts of biotech, we modestly rebalanced toward larger–cap, commercial–stage franchises to add stability and cash–flow resilience—while retaining a meaningful SMID-cap sleeve for innovation and catalyst exposure. We maintained diversified exposure across therapeutics, tools/diagnostics, and select services, with position sizes calibrated to event risk and evidence flow. Positive performance results were led by stock selection in therapeutics and platforms. uniQure advanced on renewed gene–therapy optimism, reflecting progress across key programs. Vigil Neuroscience rose following Sanofi’s announced acquisition (upfront plus potential milestones), and Alnylam gained on strong Amvuttra uptake and cardiovascular RNA–platform updates with reaffirmed growth targets. These names were material contributors and exemplify our focus on pipeline visibility and high–quality science translating to products. As in any portfolio, some investments did not perform as anticipated and detracted from overall results, including Regeneron Pharmaceuticals, Sarepta Therapeutics, and Vaxcyte—reflecting manufacturing–cost/competition pressures, clinical/regulatory headlines, and mixed pediatric vaccine data amid broader policy uncertainty, respectively. We maintained measured exposure where we see durable competitive positions, significant unmet need, and milestone–rich pipelines that can close valuation gaps over time. Several positions derated, improving forward risk–reward as we await clarity on utilization, reimbursement, or regulatory pathways. Sizing reflects near–term uncertainty; we reassess around defined catalysts and maintain divers