Baron Health Care Fund

Eli Lilly and Company (LLY) is a multinational pharmaceutical company developing drugs in diabetes, oncology, immunology, and neuroscience. Its top-selling drugs include Mounjaro/Zepbound, Trulicity, Humalog, Alimta, Taltz, Humulin, and Jardiance.
We are investors in Eli Lilly given its focus on industry-leading growth categories like diabetes, obesity, and oncology. Eli Lilly’s most recent GLP-1 drugs (Mounjaro/Zepbound) offer superb blood sugar control for diabetics and can drive 20%-plus weight loss and are likely to improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. We think GLP-1 drugs will become the standard of care for both diabetes and obesity and will be a $150 billion-plus category, driving Eli Lilly to triple its total revenues by 2030 and achieve double-digit EPS growth.

UnitedHealth Group Incorporated (UNH) is a diversified health and well-being company with almost $400 billion in revenue that operates across four segments: United Healthcare, Optum Health, OptumInsight, and OptumRX. The company serves 134 million individuals in all 50 states and more than 125 countries.
At twice the size of the next largest health maintenance organization by revenue, UnitedHealth is the leading health care franchise in the U.S. We believe it should continue to see strong growth and profitability, driven by positive demographic trends and its ability to manage costs by leveraging its size and scale, continuing its industry-leading technology investments, expanding its expertise in population health, and growing its portfolio of providers, all of which enables it to keep and effectively manage more of its health care spending in-house.

Intuitive Surgical, Inc. (ISRG) manufactures and markets the da Vinci Surgical System, a robotic surgical system used for minimally invasive surgical procedures.
We believe a large number of medical procedures that are currently performed using open surgery will eventually be performed using Intuitive Surgical’s da Vinci System. Robotic surgery is less invasive than open surgery, and patients experience less blood loss, less nerve damage, reduced pain, and faster recovery. Intuitive generates a large and expanding portion of its revenue from recurring procedures. We expect revenue and earnings to grow at attractive rates as procedure volumes increase.

Boston Scientific Corporation (BSX) is a global developer, manufacturer, and marketer of medical devices that are used in a broad range of interventional medical specialties.
We believe Boston Scientific's organic revenue growth rate will accelerate to high single digits, driven by new product launches. We believe the company will be able to expand margins by 50 to 100 basis points per year and grow earnings in the double digits. We think the combination of top-tier, accelerating revenue growth and double-digit earnings growth will drive attractive shareholder returns in the years ahead.

Argenx SE (ARGX) is a biotechnology company developing antibodies for the treatment of autoimmune disorders. The company is in the early years of the commercial launch of its drug Vyvgart, which promises to change the treatment paradigm for a host of autoantibody immune disorders.
Argenx's main product, efgartigimod, which treats a rare muscle weakness disorder, has potentially broad applicability in ameliorating overactive antibody-based diseases. Efgartigimod is a true "pipeline in a product," where the product itself is the platform, as it has the potential to be used against a diverse range of diseases – something that is rarely achieved in the biotechnology space. We expect the share price to increase as argenx proves its product’s effectiveness in multiple autoantibody disorders.

Thermo Fisher Scientific Inc. (TMO) is the world's largest life sciences tools company. Thermo Fisher provides analytical instruments, laboratory equipment, software, services, consumables, and reagents for life sciences research, manufacturing, analysis, discovery, and diagnostics.
Thermo Fisher's addressable market is $240 billion and is growing 4% to 6% due to favorable demographics, scientific advances, new technology, and increased regulations. Management expects to grow revenue on an organic basis 7% to 9%, driven by share gains and exposure to high-growth segments of the market. Competitive advantages include industry-leading scale, commercial infrastructure, an e-commerce platform, supply chain capabilities, and R&D investment. The market is fragmented, offering opportunities to create shareholder value through M&A.

Vertex Pharmaceuticals Incorporated (VRTX) is the leader in cystic fibrosis (CF) treatment. Vertex has three approved and marketed drugs, each for treatment of differing subsets of CF. These drugs represent paradigm shifts for CF patients hoping to extend their lives beyond their 30s or 40s.
We believe Vertex can grow revenue and earnings in the double digits upon approval of expanded access to its drugs in Europe. Vertex has been in the enviable position of growing its balance sheet every year. It recently completed a $4.9 billion acquisition of Alpine Immune Sciences and its BAFF/APRIL inhibitor in a kidney disorder named IgAN, materially increasing its addressable market. Longer-term success will depend on its development of a novel pipeline targeting sickle cell anemia and similar diseases, pain, rare kidney diseases such as APOL1, or cell therapies for Type 1 diabetes.

Merck & Co., Inc. (MRK) is a pharmaceutical company developing and commercializing drugs for the global market. Its current focus is lead asset Keytruda, which is used to treat several different cancers.
We believe Keytruda is one of the greatest growth assets in the medical space. Annualizing close to $30 billion at the mid-part of launch, Keytruda usurped Humira as the best-selling drug in the health care industry. We think this momentum, along with the growth of Gardasil (a vaccine for HPV), will lead to operating margin and profitability expansion well above consensus expectations. Growth potential has been bolstered by Merck's late 2021 acquisition of Acceleron Pharma, which just received a new drug approval, and early 2023 acquisition of Prometheus Biosciences.

ICON Plc (ICLR) is the second largest global contract research organization (CRO), providing outsourced drug development services to pharmaceutical and biotechnology clients. ICON has expertise in multiple therapeutic areas.
ICON became the second largest CRO through its 2021 merger with PRA Health. As drug trials become increasingly complex and biopharma companies consolidate vendor lists among top-tier providers and seek stickier strategic relationships, we believe large global CROs will be the primary beneficiaries. ICON's scale benefits enhance relevance to existing and potential customers. The outsourcing trend is accelerating, driven by biopharma's need for a lower, more variable cost structure and the inherent lack of biotechnology infrastructure.

Danaher Corporation (DHR) is a leading manufacturer in the life sciences and diagnostics markets.
The Danaher Business System (DBS) is a philosophy that stresses continuous improvement, innovation, and customer service. Danaher generates substantial cash flow to deploy into accretive acquisitions that should benefit from its DBS. Through acquisitions, Danaher has assembled a high-quality bioprocessing business with good secular growth drivers. In 2023, Danaher will spin off its Environmental & Applied Solutions business and become a pure play Life Sciences and Diagnostics company with high single-digit organic revenue growth.

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