Baron Health Care Fund

Eli Lilly and Company (LLY) is a multinational pharmaceutical company developing drugs in diabetes, oncology, immunology, and neuroscience. The company's top-selling drugs include Mounjaro, Zepbound, Trulicity, Humalog, Alimta, Taltz, Humulin, and Jardiance.
We are investors in Lilly given its focus on industry-leading growth categories like diabetes, obesity, and oncology. Leading GLP-1 drugs Mounjaro and Zepbound offer superb blood sugar control for diabetics, can drive 20%-plus weight loss in obese patients, and are likely 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, representing a $150 billion-plus market. We believe Lilly has the potential to double revenues and achieve double-digit EPS growth by 2030.

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 (efgartigimod alfa) for a rare muscle weakness disorder.
Efgartigimod 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.

Boston Scientific Corporation (BSX) is a global developer, manufacturer, and marketer of medical devices used in a broad range of interventional medical specialties.
We believe Boston Scientific can grow organically by at least high single digits, driven by new product launches, which, in turn, should generate 50-plus basis points in margin growth and double-digits earnings growth annually. We think the combination of top-tier revenue growth and double-digit earnings growth will drive attractive returns in the years ahead.

Stryker Corporation (SYK) is one of the world's leading medical technology companies, known for its orthopedic implants and the Mako robotic system. The company also offers a portfolio of medical, surgical, and neurovascular products.
We see Stryker as a high-quality compounder and anticipate long-term, high-single-digit revenue growth and double-digit EPS growth. Stryker is a leading innovator, with new product launches including the 1788 camera for enhanced endoscopy imaging, System 9 power tools, and Insignia muscle-sparing implants. We believe the company is poised to benefit from the growing shift of orthopedic procedures from hospitals to ambulatory surgical centers, where it is well positioned to leverage its unique Mako robotic system.

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’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.

Masimo Corporation (MASI) is a global medical device company that manufactures and sells a variety of non-invasive patient monitoring technologies, including devices measuring pulse oximetry.
Masimo has been gaining market share as clinical studies have demonstrated that its proprietary monitoring technology is superior to competitor products. Masimo's razor-razorblade business model generates a recurring revenue stream from the sale of disposable fingertip sensors. The company operates in a core market of $9 billion for hospital monitoring and automation.

Danaher Corporation (DHR) is a leading manufacturer in the life sciences and diagnostics markets.
The company's key advantage is the Danaher Business System, designed to continuously improve performance in the areas of quality, delivery, cost, growth, and innovation. Through acquisitions, Danaher has built the leading business in bioprocessing, with a broad and diverse portfolio spanning the entire workflow. On the diagnostics side, Danaher’s Cepheid business has become a gold standard in molecular point-of-care testing.

Waters Corporation (WAT) is a leading provider of quality control instruments and consumables for biopharmaceutical drug manufacturing. The company holds a dominant position in liquid chromatography, leveraging proprietary column chemistry to efficiently separate contaminants from drug mixtures for analysis.
Waters is benefiting from a boost in its instrument business as the biopharmaceutical industry enters a replacement cycle. The company also enjoys unique growth drivers, including increased demand from Indian generics, GLP-1 testing, biologics, and PFAS testing. Waters recently outlined robust long-term financial targets, including high single-digit revenue growth, adjusted operating margin expansion from 31% in 2024 to 35% by 2030, and EPS growth exceeding 10%. We view Waters as a high-quality compounder with room to further improve its already best-in-class margins.

McKesson Corporation (MCK) is a leading distributor of pharmaceuticals and medical supplies. The company also provides prescription technology solutions that connect pharmacies, providers, payers, and biopharmaceutical customers.
McKesson has taken steps to streamline its operations and focus on high-growth areas, including oncology and biopharmaceutical services. Management is targeting 12% to 14% long-term earnings growth, driven by a 6% to 8% contribution from organic growth, plus operating leverage and a 6% contribution from capital allocation. We believe the company maintains a strong competitive position in attractive end markets and offers solid earnings growth potential.

Penumbra, Inc. (PEN) is a medical device company that develops and manufactures mechanical thrombectomy devices used to remove blood clots that can lead to serious conditions throughout the body. A smaller portion of Penumbra’s business comes from embolization and vascular access products.
We believe Penumbra is highly differentiated in its core thrombectomy business. The primary mechanism in this segment is aspiration (suction) to extract clots from the body. Penumbra has also introduced computer-assisted vacuum thrombectomy, which uses algorithms to modulate aspiration power when a clot is detected and control a separate valve that injects saline to reduce friction between the clot and catheter. This results in a unique device profile that maximizes clot removal while minimizing the risk of blood loss.