Long-term growth potential is set to draw investors to the healthcare and biotech sectors in 2025 as the global economy slows and interest rates begin to drop.
While the current economic landscape makes the safe-haven appeal of the sector attractive, structural growth drivers such as ageing Western populations and rising healthcare spending also increase the sector’s appeal.
This contrasts with recent years in which the biotech and health tech industries were overlooked as investors focused on high-growth sectors like technology.
A high interest rate environment was not supportive of long-duration investments, such as those in biotech, whose trials can demand many years of patience.
Particularly for biotech, the process of bringing new drugs to market is long, expensive and uncertain – only a small percentage of drugs successfully pass clinical trials.
Yet the long-term growth potential of healthcare can’t be ignored — the sector accounts for 10.2% of global GDP and with the global GDP projected to reach $137 trillion by 2030, there will be some $14 trillion spent on healthcare every year.
The smaller end of the market — across biotech, pharmaceuticals, health tech and medtech — presents its own opportunities, further supported by the recent underperformance of small caps overall over the past year.
Many analysts say healthcare stocks remain undervalued and that there are compelling opportunities in the space for investors.
The following ASX-listed health companies are each worth taking a closer look at.
Anteris Technologies Global
Anteris Technologies Global Corp (ASX:AVR, OTC:AMEUF) is developing and commercialising innovative medical devices that restore healthy heart function.
The company's lead product, the DurAVR® Transcatheter Heart Valve (THV), was developed in collaboration with leading interventional cardiologists and cardiac surgeons to treat aortic stenosis, a potentially life-threatening condition caused by narrowing of the aortic valve.
The balloon-expandable DurAVR® THV is the first biomimetic valve designed to mimic the shape and function of a healthy human aortic valve, promoting normal aortic blood flow.
DurAVR® THV is constructed from a single piece of molded ADAPT® tissue, Anteris’ patented anti-calcification technology. ADAPT® tissue, which has received clearance from the US Food and Drug Administration (FDA), has been used clinically for over a decade in more than 55,000 patients worldwide.
The DurAVR® THV System integrates the DurAVR® valve, ADAPT® tissue and the balloon-expandable ComASUR® Delivery System.
Anteris is now dual listed in Australia and the US, having recently begun trading on the Nasdaq after closing out a US$88.8 million (A$138.4 million) initial public offering (IPO).
It plans to use the IPO net proceeds, along with its existing cash and cash equivalents, to advance the development of its DurAVR® transcatheter heart valve and to prepare for and enrol participants in a global randomised pivotal study for treating severe aortic stenosis.
Recce Pharmaceuticals
Recce Pharmaceuticals Ltd (ASX:RCE, OTC:RECEF) is developing a new class of synthetic anti-infectives designed to address the urgent global health threat of antibiotic-resistant superbugs. The company has a diversified pipeline that is rapidly evolving towards commercial launch.
Recce is on track to be the only global clinical-stage company whose drug is shown to be efficacious against the full suite of ESKAPE pathogens — a group of six highly virulent and antibiotic resistant bacterial pathogens.
Its pipeline includes three patented, broad-spectrum candidates:
- RECCE® 327 (R327) - An intravenous and topical therapy for severe bacterial infections caused by Gram-positive and Gram-negative bacteria, including superbugs.
- RECCE® 435 (R435) - An oral therapy for bacterial infections.
- RECCE® 529 (R529) - A treatment for viral infections.
Recce has secured Australian patents for its anti-infectives, meaning its assets are now fully patent-protected in all major pharmaceutical markets globally.
The Australian patents mean that Recce’s process, use and method for the novel anti-infectives are now covered until 2037 in Australia, the US, China, Europe (Germany, Spain, France, the UK, Italy, Sweden), Japan and Hong Kong.
The company recently received a key approval in Indonesia for a registrational Phase 3 clinical trial assessing RECCE® 327 as a topical gel (R327G) for the treatment of diabetic foot infections (DFIs).
This means Recce is cleared to begin the clinical trial, bringing forward commercial opportunities for the company in the lucrative ASEAN region.
Tryptamine Therapeutics
Pharmaceutical (TADAWUL:2070) company Tryptamine Therapeutics Ltd (ASX:TYP, OTC:TYPTF) is focused on developing psilocin-based compounds for the treatment of diseases with unmet medical needs through accelerated regulatory pathways.
The company's Psilocybin-For-Neuropsychiatric Disorders (PFN™) program is focused on the development of synthetic psilocybin as a new class of drug for the treatment of chronic pain and other indications.
In December, TYP received encouraging interim results from the first four participants in its Phase 2a clinical trial assessing TRP-8802 – oral psilocybin – for Irritable Bowel Syndrome (IBS), providing another strong indication of the broad potential of Tryp’s clinically-backed product suite to achieve improved patient health outcomes.
With IBS impacting 20% of Australians and 15% of the US population, the company sees substantial commercial potential for TRP-8803 to address this debilitating condition and improve patient quality of life.
The IBS trial forms part of Tryp’s broader clinical development program, which has included successful Phase 2a studies in Binge Eating Disorder (BED) and Fibromyalgia.
Orthocell
Orthocell Ltd (ASX:OCC, OTC:ORHHF) is developing world-leading regenerative medicine products to unlock the power of the human body to heal – restoring mobility, function and performance.
Orthocell manufactures two regenerative medicine platforms: collagen scaffold medical devices and cell therapies.
The company’s Striate+™ product is a sterile, resorbable collagen membrane used for guided bone and tissue regeneration in dental applications. It is available for sale in Australia, United States, United Kingdom (TADAWUL:4280) and the EU.
Used for the treatment of articular cartilage defects in the knee and ankle, Orthocell’s OrthoACI™ or autologous chondrocyte implantation is available for sale in Australia.
The company is also targeting the US$1.6 billion nerve repair market with a United States Food and Drug Administration (FDA) application submitted for clearance to commercially distribute its nerve repair product, Remplir™ in the US.
Remplir is already approved and available in Australia, New Zealand and Singapore, where it has gained traction and endorsement among surgeons for its unique nerve repair properties.
Orthocell CEO and MD Paul Anderson said: “We are thrilled to submit our US 510(k) regulatory application following successful pre-submission meetings with the FDA and completion of our pivotal regulatory study.
“We believe Remplir is redefining the nerve repair market and leading the way in successful nerve repair surgery.
“With a strong balance sheet, and US sales and medical affairs team leads in place, we are now resolutely focused on preparing for launch and to commence selling Remplir in the largest healthcare market in the world.”
With $33 million in cash as of November 2024, the company is well-positioned to drive its US launch and expand regulatory efforts into other jurisdictions, including Canada, Europe, the United Kingdom and other ASEAN markets.
Lumos Diagnostics Holdings
Lumos Diagnostics Holdings Ltd (ASX:LDX, OTC:LDXHF) is a leader in rapid point-of-care (POC) diagnostic technologies,
Over the past year, LDX commercially launched its flagship diagnostic products, FebriDx and ViraDx, and achieved initial sales.
FebriDx® is our innovative rapid point-of-care diagnostic test, providing healthcare professionals with the ability to differentiate bacterial from non-bacterial infections quickly and reliably, addressing a pressing healthcare need in infection management.
ViraDx™ is a rapid test for COVID-19, Flu A, and Flu B, which enables the timely identification of viral infections, essential for patient care during flu season.
Each has received product clearances from the United States FDA, demonstrating the team’s collective capability and expertise across research, development, regulatory compliance, and quality assurance.
The company has also partnered with Hologic, a collaboration that has resulted in Intellectual Property and Development Agreements to support Hologic’s next-generation Fetal Fibronectin (fFN) preterm birth test.
Looking ahead, the company is focused on exploring new market opportunities in rapid, point-of-care tests in the women’s health market.