Transcription of The Stock Network Interview with The Armchair Analyst, Jason Segal
Lel Smits: There are a lot of reasons to be excited about biotech and medtech companies on the ASX. Just last month, Eli Lilly became the first healthcare company to reach $1 trillion. The Nasdaq Biotech Index is the highest performing index over the last six months, up 36%.
And as we head into 2026, I’m joined by analyst Jason Segal, who has been an analyst at Next Investors for the last six years, covering the healthcare sector and also small cap investments, and has just started his own daily newsletter covering the life sciences industry called the Armchair Analyst. I’m thrilled today to ask Jason some questions about where the healthcare sector has been and is headed in the year ahead. Jason, welcome to the Stock Network.
Jason Segal: Thanks, Lel, great to be here.
Lel Smits: Now, how would you evaluate the life sciences industry in the year we’ve just had?
Jason Segal: Yeah, look, it’s been an interesting year, a bit of an up and down year. I think that the first half of the year was a little bit rough for the life sciences industry.
If you look overseas, I think that a lot of the confusion and challenges came around the tariffs and the most favoured nation pricing for big pharma. So a lot of investors were relatively skittish about taking the plunge and making investment in life sciences stocks. Just that first half of 2025 was quite a big challenge.
But really, sort of since June, we’ve seen a really big uplift in the industry. And I think that the Nasdaq biotech index is up 36% in the last six months, and is one of the best performing indexes across all sectors in the US. What we’ve seen is Eli Lilly become the first trillion dollar market cap life sciences company.
In the last couple of weeks, we’ve seen multiple, sorry, not a couple of weeks, but last sort of month, we’ve seen the multiple like $10 billion plus mergers and acquisitions. Probably the most famous one was when Pfizer bought Metsera for $10.5 US billion. That was for a weight loss program, and there was a bidding war between them and Novo Nordisk.
Merck acquired Sidara for $9.2 billion. And even in the medtech space, Abbott’s had a big $21 billion acquisition of exact science. And so there’s been a lot of this M&A activity sort of in the second half of the year.
And I think that that’s reflected in sort of the rising tide lifts all boats. So we’ve seen a lot of the Australian companies on the ASX perform quite well in that sort of second half. 4DX has had a very good year, Star Pharma, BlinkLabs.
And what we’re starting to see as well is that investors are returning to the life sciences companies, particularly as they look to speculate on outcomes at clinical trials that might be coming up. So Actinogen has had a very, very good last few months. And Island Pharmaceuticals has also performed really well as people look to speculate on them being able to fast track their drug development through the animal rule pathway, which is a bit of an interesting one.
Look, the Australian markets haven’t been without their challenges. There was a couple of IPOs early in December that really didn’t perform so well. They’ve recovered a little bit now, but that was a challenge for the industry.
And there was a big clinical trial result from Optia that just didn’t go their way. And sort of that highlighted the challenges and risks of what happens when clinical trials don’t always run your way. But what we’ve seen is like, even though there are those risks, the rewards can be big.
And a couple of the larger cap companies that have already had clinical trial results have kicked on. So Neuron’s had a really good year, even though it was capped at a billion plus just at the start of the year, they’ve kicked on and sort of up 54% for the year. Mesoblast already also had a very, very good 12 months, sort of trying to get their, just starting to get their drugs into the commercialisation stage.
So a little bit of a mixed bag, but definitely the second half of the year and going into 2026, we’re seeing some really good activity.
Lel Smits: And looking more at 2026, what do you think investors can expect from the biotech and medtech industries in the year ahead?
Jason Segal: Yeah, another really good, good question. I think that, I think that the M&A activity that we’ve seen in the last few months is going to continue.
There’s this big pharma has this big challenge. There’s every year, there’s about, so there’s about $176 billion worth of annual revenue that is going to come off and off exclusivity and going to be competing against generics, which it’s called the patent cliff. So, so big pharma is coming up against this patent cliff and there’s a couple of quite well known and meaningful drugs that will provide a lot of revenue for big pharma companies that they now need to go and through, through acquisition, effectively rebuild that pipeline of revenue.
So, I was listening to a podcast the other week and they were talking about the Jefferies conference in London and how, how Pfizer was talking about the, the acquisition that they did. And even though they spent, you know, 10 and a half billion on, on the, on Metsera, there’s still, you know, five to $10 billion worth of, of firepower sitting on the sidelines, ready to acquire late stage assets. And I think again, once the late stage assets are acquired and there’s the investors can see that exit potential for, for mid to larger cap biotech companies or the small ones sort of shuffle up as well.
So, I think that also in the med tech space, there’ll be a lot of focus on AI. We’ve already seen quite a few of the AI companies on the ASX perform really well in the last 12 months. And there’s always new data that comes out.
There’s a lot of companies that are presenting phase three clinical trials and phase two clinical trials that I’m looking forward to just off the top of my head, like Actinogen’s coming up with their, you know, their, some interim results for Alzheimer’s. Sinada, who I think speaking today, they’ve got two, two or one phase two and one phase three clinical trial. Dymeric should have their phase three readout.
VECCO has a phase three readout. A lot of the companies in the, you know, in the oncology space will have continued results that are, that are presented. So there’s lots of different exciting things to look forward to.
And we’ve, as investors, we look for the results. The results are the things that we can’t, we can’t really affect, but they’re the ones that either move the share price up or down. So that’s, that’s what I’m really looking forward to.
Lel Smits: Fantastic. And final question, Jason, if we can talk about AI for a second, what can you see as the opportunity here for the healthcare industry?
Jason Segal: Yeah. Yeah. So I’ve been, I’ve been thinking about this quite a lot in the last, you know, since I started writing the, writing the newsletter. And I listened to the CEO of OneView, James, who, who, who, who should be speaking today. And he had a really interesting take.
It was effectively that the healthcare industry has the most to gain and the least to lose from using AI. And I think that that sits across the board. So at the moment, AI in the healthcare space, medical imaging is the, the one that’s the most obvious and the one that’s been adopted the, the fastest.
And you can see in a couple of companies, 4DX, AYA, that have performed, they’re in some of the top performing healthcare companies on the, on the ASX in the last 12 months. These are all in the medical imaging space. We see, I think that AI for personalised care is going to become much more, much more of a bigger player.
We’ve all, you know, searched up our symptoms when we’ve been sick into CHAT-GPT. I think that like my wife’s second, second doctor and doctor on call is, is effectively CHAT-GPT. So I think that that’s going to start to play a role. And if, if, if companies can start to think about personalised care and at the, at the tip of their fingertips, I think that’s going to be really interesting. There’s, there’s been some interesting stuff in drug development, AI for drug development, and where I think it gets, where I think that is going to be the most impact is actually AI in clinical trials. So early in December, the FDA announced that they’re going to start to use AI in their reviews, some of their reviews process, a lot of administrative tasks, but what, like how, how far can that be taken? So right now the, the double blind placebo controlled study is the gold standard for measuring and evaluating drugs. But what happens if AI is able to predict with extreme accuracy, the results of those trials, or at least support that? Can that as a, as a function of bringing drugs to market faster, be able to save a lot of capital and, and help the development pipelines for these life sciences companies? Yeah. So I think there’s a lot, lot of opportunities. So sort of short, like immediate term in the medical imaging space, sort of like a small, a short, short future in the, in the sort of personalised care and, and, automating some of the stuff around the healthcare system and then like way off into the future, can AI really predict the outcomes of these clinical trials?
Lel Smits: Well, Jason, thank you so much for your insights today. I’m thrilled to have you have joined us on the Stock Network’s ASX GEMS Healthcare Spotlight. Great.
Jason Segal: Thanks a lot. Appreciate it.
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