By coinnews 
00:00 Speaker A
Moderna shares moving to the upside today, the FDA granting the company limited approval for its lower dose COVID-19 vaccine. This coming as the pharmaceutical industry has been under pressure, facing fractured relationship with HHS head RFK Jr., as well as tariff policy risks more broadly. Our next guest names two key areas of opportunity for investors in the healthcare space. Joining us now, Jason Kreitzer, Morgan Stanley Investment Management portfolio manager. Jason, great to speak with you this morning. Obviously, as we mentioned, a lot of headwinds for the pharmaceutical industry. What is giving you some optimism about how pharma stocks could do in the second half of the year right now?
00:52 Jason Kreitzer
Sure. Well, we’re we’re trying to focus on areas where there’s less attention that the administration has. Uh, medical devices and animal health are two areas that uh, really are kind of avoiding a lot of the spotlight, uh, from an administration perspective. Um, you know, if you look at healthcare, it’s been very, very volatile this year. Uh, bottom of the leaderboard, uh, in terms of performance in the S&P from the S&P sector perspective. So, uh, trying to find areas where, uh, there are opportunities. On the medical device side, we’re we really like, uh, Intuitive Surgical. This is a robotic surgery company. Uh, this is a very cool company that it’s um, very uh, innovative in terms of its, uh, uh, design of its new products which are helping surgeons basically become better, better at their job. Uh, the addressable market for the uh, for the Da Vinci five, which is their new, uh, their new robot, it’s had about eight million global procedures. Uh, and this is in neurology, general surgery, gynecology. The company’s procedure growth is in the 13 to 16% range. That’s volume growth. We don’t really see that kind of growth in uh, in healthcare and so this has been a terrific long-term compounder. Um, you know, in the other areas, uh, we really like uh, animal health. Um, Zoetus is a uh, leader in uh, in the both companion animal, which is pet and livestock space. Um, for the last 10 years, Zoetus has grown above market. And that has been um, a core to that thesis, really has been their innovation. They’re very large in uh, pain, in flea and tick and uh, also in dermatology. Pain is more recently. Uh, there are 27 million dogs under the care of uh, vets in the US that have um, osteoarthritis and their pain medicine is uh, really just scratching the surface. They’re only uh, attributed uh, sales that space to about a million dogs.
04:39 Speaker A
Yeah.
04:40 Jason Kreitzer
been a lot of questions in the uh, in the market about, uh, uh, drug pricing uh, in human health. Um, keep in mind, there’s no Medicare. There’s no doggy Medicare, so from that perspective, uh, you know, we like animal health.
05:04 Speaker A
Yeah, I thought that was a really interesting framework, Jason. Is animal health investing a way to be Washington-proofing your health portfolio right now?
05:23 Jason Kreitzer
We think so. We think so. I mean, you know, really, if you look at, it’s a cash pay market. As I mentioned, no Medicare. Um, as we all know, people love their pets and will be, uh, willing to spend a lot on their pets sort of out of pocket. And so while no, uh, sector is completely immune to economic, uh, uncertainties, uh, the pet market is, is one that’s, you know, very exciting.
06:08 Speaker A
And my guest host, Jay Woods, has a question for you, Jason.
06:14 Jay Woods
Hey Jason, I I think you’re on to something big there. The ETF pause, PAWZ is a conglomerate of all those uh, stocks. And you mentioned Zoetis, you may have already answered most of this question, but why does that stand out? Uh, because there are other options within the pet insurance sector. Uh, was it the livestock side of it? What was the thing that stuck out the most to you about Zoetis?
06:50 Jason Kreitzer
Well, if you think about uh, Zoetis, Zoetis was a was a spin about uh, 12 years ago out of Pfizer. And their roots are really in on the innovation side on the animal health rather than on the livestock. They do, they are a leader in livestock. Um, and so their, uh, innovation engine is really what’s attractive. They are coming out with new medicines for pets that um, have um, great outcomes. And that is really fueling their growth and you know, they’re an above market grower, um, which has made it uh, attractive to us.
07:55 Speaker A
Jason, really appreciate your time this morning. Thank you so much.
08:00 Jason Kreitzer
Thank you.