Health Is Wealth

Structural tailwinds powering healthcare’s long-term investment opportunities

Life presents many challenges, but when it comes to health, there is truly no substitute for effective solutions. Healthcare is not merely a sector—it is fundamental to quality of life, one of the clearest barometers of human progress, and the backbone of economic resilience. Unlike discretionary spending, healthcare is an essential, unavoidable expense, making it resilient even in uncertain economic times.

We see healthcare as a unique arena where demographic shifts, technological breakthroughs and evolving global needs converge, creating enduring investment opportunities. Our quality-first philosophy targets industry leaders who combine strong pricing power, recurring revenues, robust balance sheets and innovation-led growth.

Why healthcare?

By 2050, 17% of the global population will be over 65 years old. Ageing populations bring a surge in chronic illnesses such as cardiovascular disease, diabetes and musculoskeletal disorders. Cardiovascular disease alone causes 17.9 million deaths annually - nearly one-third of all global deaths - while more than 537 million adults live with diabetes today.

This demographic shift will dramatically increase demand for innovative, effective healthcare solutions that improve quality of life, reduce hospitalisation, and lower long-term costs. As chronic conditions become more prevalent, the need for advanced medical technologies and treatments that can address these challenges at scale becomes increasingly critical - making healthcare a resilient and essential sector for long-term investment.

The key for investors isn’t just to tap into growth – it is to back the companies driving change who are poised to scale with global demand. Ultimately, the best way to control the future is to create it. That’s exactly where we focus.

Redefining cardiovascular care: Edwards Lifesciences and the TAVR revolution

One of the most significant advances in modern cardiology is TAVR—Transcatheter Aortic Valve Replacement. Traditionally, patients with severe aortic stenosis (a narrowing of the aortic valve in the heart) required open-heart surgery. TAVR offers a minimally invasive alternative - a new valve is inserted via a catheter, typically through the leg - allowing for faster recovery and fewer complications.

Edwards Lifesciences is the pioneer of TAVR and the global leader in structural heart therapies. A long-term holding in the EPIC Global Equity Fund, Edwards is at the forefront of expanding TAVR to a wider population, including lower-risk and earlier-stage patients. The data speaks volumes: in a landmark study of 24,000 asymptomatic patients with severe aortic stenosis, prompt TAVR treatment led to

• $36,000 lower healthcare costs per patient in the year post surgery

• 2.2 fewer hospital days

• 80% fewer heart failure-related hospitalisations within a year

Most strikingly, when compared with asymptomatic severe aortic stenosis, patients who delayed treatment until disease progressed faced a sevenfold increase in mortality risk within one year after aortic valve replacement.

This evidence supports a major shift in clinical practice - from reactive care to proactive, pre-symptomatic intervention. With regulatory tailwinds and growing physician confidence, TAVR is poised for a multi-decade growth runway.

Transforming mitral and tricuspid valve therapies (TMTT)

Beyond aortic valve disease, millions of people suffer from problems with their mitral and tricuspid heart valves. These valves help control blood flow through the heart, and when they don’t work properly, blood can leak or flow the wrong way. This makes it harder for the heart to pump efficiently, leading to symptoms like tiredness, difficulty breathing, and in severe cases heart failure, which can be life-threatening.

For many years, treatment options were limited, especially for older or frail patients who faced high risks with traditional open-heart surgery. Now Transcatheter Mitral and Tricuspid Therapies (TMTT) offer a major breakthrough in heart care that saves lives: these minimally invasive treatments use thin tubes called catheters to repair or replace the damaged valves without the need for open-heart surgery.

Edwards Lifesciences is leading the way in developing TMTT. In the first quarter of 2025, the company reported a remarkable 60% increase in TMTT sales compared to the previous year. This rapid growth shows that doctors are increasingly adopting these treatments, opening up a larger market for structural heart therapies.

Competitive landscape: Edwards extends its lead as rivals retreat

In May 2025, Boston Scientific announced its exit from the global TAVR market, citing ongoing clinical and regulatory challenges. This move underscores the technical complexity, stringent approval processes and significant intellectual property barriers that define the structural heart therapy landscape.

With fewer credible competitors, Edwards Lifesciences is positioned to capture a larger share of this expanding market, which is projected to surpass $10 billion annually by the early 2030s. Their first-mover advantage, strong R&D pipeline and proven clinical success reinforce their competitive moat and provide a solid foundation for sustained long-term growth.

Surgical Robotics - the next frontier in healthcare innovation

Robotic-assisted surgery (RAS) is revolutionising surgical care by significantly enhancing precision, enabling minimally invasive procedures, reducing the risk of complications and allowing faster recovery times for patients. By giving surgeons greater control and accuracy when performing complex operations through small incisions, RAS minimises tissue damage and lowers the chances of infection and bleeding. This leads to shorter hospital stays, less postoperative pain, quicker returns to normal activities, and reduces the demand for nursing staff - an important consideration given structural shortages.

Despite these clear advantages, robotic-assisted procedures currently make up less than 5% of the approximately 310 million surgeries performed globally each year. This low level of adoption highlights a substantial opportunity for growth as hospitals and surgical centres increasingly embrace this cutting-edge technology. With rising awareness among patients and clinicians, ongoing advances in robotics and falling costs, the global market for robotic surgery is well placed for rapid expansion in the years ahead.

Intuitive Surgical

Intuitive Surgical dominates the global minimally invasive surgery robotic system market, installed in more than 11,000 systems. The company’s ecosystem benefits from:

• Deep procedural expertise

• High switching costs

• A razor–razorblade business model generating recurring revenue

In Q1 2025, procedural volumes rose 16% year-on-year, with international procedures now accounting for over 30%, highlighting a substantial runway for global adoption and growth. In 2024, Intuitive Surgical installed 1,526 da Vinci surgical systems, a 12% increase compared to 2023. The company also reported a 17% year-on-year rise in procedures performed using its systems, reaching nearly 2.7 million in 2024.

Business model strength: recurring revenue, innovation and a strong market moat

Intuitive Surgical exemplifies a powerful business model, with 84% of its revenue recurring through consumables, services and software linked to its rapidly expanding installed base. Coupled with gross margins approaching 70%, a multi-billion-dollar cash reserve and zero debt, ISRG is exceptionally well-positioned to invest heavily in research and development as well as strategic acquisitions.

The company’s dominant market position, combined with high switching costs, significant regulatory barriers, its extensive patent portfolio and deep clinical trust create a durable competitive moat.

ISRG’s robust innovation pipeline - which includes flexible robotics, AI-enhanced surgical guidance and advanced digital workflow solutions - not only reinforces its leadership but also lays the groundwork for sustained long-term growth.

Beyond Edwards and ISRG: other healthcare leaders in our portfolio

Edwards Lifesciences and Intuitive Surgical are clear frontrunners in their respective fields of structural heart therapies and robotic-assisted surgery, leveraging innovation and strong competitive moats to fuel rapid growth. Alongside these leaders, our other portfolio companies - Novo Nordisk, Stryker, IDEXX Laboratories, Veeva Systems and Danaher - excel in specialised healthcare niches, underpinned by robust R&D, high switching costs and growing global demand. Together, they create a diversified and resilient core of healthcare innovators, well-positioned to deliver sustainable long-term growth while navigating evolving industry trends and demographic shifts.

Why this matters for Investors

Healthcare offers a compelling blend of growth and resilience, thanks to its non-cyclical nature that helps dampen portfolio volatility. The sector is powered by enduring megatrends - an aging global population, increasing prevalence of chronic diseases and continuous technological innovation- that are unlikely to reverse anytime soon.

Companies with durable competitive moats and strong recurring revenue streams are well positioned to compound capital efficiently over the long term. At the crossroads of innovation, regulatory oversight and demographic shifts, healthcare stands out as a sector primed for sustained investment success and portfolio diversification.

Conclusion

At EPIC, we view healthcare innovation as a cornerstone of durable, compounding returns - on par with transformative technology leaders and astute serial acquirers, as detailed in our previous insights. By including these healthcare pioneers in our portfolio, we expand our exposure to sectors propelled by secular growth and innovation-driven disruption. From dominant tech platforms to serial acquirers such as Constellation Software and Lifco, alongside cutting-edge healthcare innovators, the EPIC Global Equity Fund offers access to some of the most powerful and enduring growth engines shaping global markets.

Malcolm Schembri

Fund Manager, EPIC Global Equity Fund