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Healthcare Institutional Investors

Special Report | 2022 | 30 pages

Special Report: Healthcare Institutional Investors U.S., Canada & U.K. Report

2 HEALTHCARE INSTITUTIONAL INVESTORS CONTENTS The margin of error for survey results, at the 95% Confidence Level: 3 - Market Average: +/ - 4.5%, United States, United Kingdom, Canada, +/ - 7.8% Fieldwork conducted: Nov 17 – Dec 6, 2021 U.S. UK Canada 225 75 respondents respondents/country • PANDEMIC ACCELERATES AN INCREASE IN HEALTHCARE ALLOCATION 5 • INNOVATION IS A TOP VALUE DRIVER 11 • ESG EXPECTATIONS ARE HIGH; NOW AN INVESTOR EXPECTATION 15 • QUALITY OF HEALTHCARE COMMUNICATIONS IS POOR 20 • LEADERSHIP & VISION FOR FUTURE: CRITICALLY IMPORTANT TO TRUST 26 • RECOMMENDED ACTIONS 30

Healthcare Institutional Investors - Page 2

3 In USD Primary investment style (%) 4 34 44 18 18-24 25-34 35-44 45+ Age (%) Gender (%) Growth 36 Value 19 Industry - specific 15 Hedge 10 Quantitative/Index 8 GARP 4 Activist 4 J ob titles (%) 33 35 31 < $1b $1b – < $10b $10b+ Organizations’ assets u nder management (%) INVESTOR PROFILE 2021 Edelman Special Report: Healthcare Institutional Investors D2. What is the primary investment style for the funds you manage on behalf of your organization? // S1. What is your current ag e? // D4. What is your gender? S12. Which of the following best describes your position or level within your company or organization? // S7. In your current jo b, approximately how much are your institution's investable assets? Base: 3 - Market Average n=225 35 29 21 7 6 Chief Investment Officers Financial Analysts Portfolio Managers Directors of Research Investment Stewardship 35 65 Women Men

3 4 2 1 5 HEALTHCARE INVESTOR INSIGHTS & EXPECTATIONS Pandemic accelerates an increase in healthcare allocation While organizations offering “frontline services” were most likely to benefit from increased investment in 2021, investors anticipate continued growth across sub - sectors , particularly in medical devices / equipment and pharmaceuticals. Innovation is a top value driver The pandemic has proven companies can innovate quickly. Adaptability and technological advancement are seen as top value drivers by investors in healthcare. ESG expectations are high; continue to be an investor expectation Investors expect healthcare companies to make a tangible, positive impact on society, and believe companies that do deserve premium valuation. Healthcare companies seen as having poor communication On average, investors use 5 - 6 sources to assess potential healthcare investments, citing most companies as unprepared to communicate effectively with investors. Leadership & vision for future: critically important to trust Both forward - thinking leadership* and financial performance are critical in building trust when considering companies to invest in. *defined as strong leadership, a vision for the future, and willingness to take risks

PANDEMIC ACCELERATES AN INCREASE IN HEALTHCARE ALLOCATION

6 Percent of investors who say SIGNIFICANT INCREASE IN HEALTHCARE ALLOCATION THROUGHOUT 2021 2021 Special Report: Healthcare Institutional Investors: Q2. How has your investment allocation for each of the following industries changed, if at all, over the past 12 months? Showing NET Increased: Somewhat increased + Significantly increased. Base: 3 - Market Average n=225 ; United States n= 75 52 39 49 33 36 24 85 75 73 U.S. UK Canada I have increased my allocation in healthcare in 2021 78 % 47 Somewhat increased 31 Significantly increased 3 - mkt average

7 Percent of investors who are currently invested in each sector PANDEMIC SPOTLIGHTS IMPORTANCE OF FRONTLINE SERVICES 2021 Special Report: Healthcare Institutional Investors: S8A: You indicated your firm is currently invested in healthcare. Which of the following healthcare subsectors is your firm curren tly invested in? Multi - choice. Base: 3 Market Average n=225 // Q6: How has your investment allocation changed, if at all, for each of the following healthcare subsectors over the past 12 m ont hs? Shown T2B; Increased Investment Base: Those who are invested in each sub - sector (min 104 to max 154), 3 Market Average 3 - mkt average Percent of investors who increased their allocation in each in the past 12 months Medical devices / healthcare equipment & supplies 47 Pharmaceutical / specialty pharmaceutical 45 Health & hospital systems / healthcare services 40 Digital / health tech / healthcare IT 36 Health & wellness 32 Biotech 35 Life science tools & services / Labs & CROs 25 46 49 52 56 57 62 68 Allocation to frontline services increased the most in the past year.

8 INVESTMENT IN HEALTHCARE SECTOR BECOMES MORE ATTRACTIVE SINCE PANDEMIC 2021 Special Report: Healthcare Institutional Investors Q8. How did the COVID - 19 pandemic impact the attractiveness of investing in each of the following healthcare subsectors? Shown T2B; Made it a more attractive investment . Base: 3 Market Average n=225 // Base: Those who are invested in each sub - sector, 3 Market Average (min 104 to max 154) 3 - mkt average Pharmaceutical / specialty pharmaceutical Medical devices / healthcare equipment & supplies Health & hospital systems / healthcare services Biotech Life science tools & services / Labs & CROs Digital / health tech / healthcare IT Health & wellness 64 67 68 68 68 70 75 Percent of investors who say the COVID - 19 pandemic has increased the attractiveness of investing in each sector

9 Percent of investors who say the following has driven their increased investment in healthcare over the past 12 months ANTICIPATION OF CONTINUED GROWTH DRIVES INVESTMENT IN HEALTHCARE 2021 Special Report: Healthcare Institutional Investors: Q4. Please indicate what has driven your increased investment in healthcare over the past 12 months. Multi - choice Base: Those indicating an increase in investment in healthcare over the past 12 months, 3 Market Average n=175 3 - mkt average My firm anticipates the sector will continue to grow post - pandemic The sector was producing higher returns compared to pre - pandemic performance The sector was producing higher returns compared to other sectors My firm anticipates long - term upside in the healthcare sector 47 53 56 57

10 Percent of investors who agree MAJORITY AGREE PANDEMIC HIGHLIGHTED VALUE OF HEALTHCARE INVESTMENTS 2021 Special Report: Healthcare Institutional Investors: Q 7 : To what extent do you agree or disagree with the following statements regarding investing in healthcare? Shown NET Agree =T3B Agree Base: 3 - Market Global Average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 88 91 81 U.S. UK Canada The COVID - 19 pandemic has highlighted the value of healthcare investments in the long - term 87 % 3 - mkt average

INNOVATION IS A TOP VALUE DRIVER

12 Percent of investors who agree INDUSTRY RESPONSE TO COVID - 19 CRISIS PROVES SECTOR HAS POTENTIAL TO INNOVATE AT SPEED 2021 Special Report: Healthcare Institutional Investors: Q 7 : To what extent do you agree or disagree with the following statements regarding investing in healthcare? Shown NET Agree =T3B Agree Base: 3 - Market Global Average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 88 87 87 U.S. UK Canada The COVID - 19 pandemic has proven that... Healthcare companies are able to innovate faster than they have done historically 3 - mkt average 87 %

13 Percent of investors who agree MAJORITY BELIEVE COVID - 19 VARIANTS WILL CONTINUE TO DRIVE DIGITAL TRANSFORMATION 2021 Special Report: Healthcare Institutional Investors: Q 7 : To what extent do you agree or disagree with the following statements regarding investing in healthcare? Shown NET Agree =T3B Agree Base: 3 - Market Global Average n=225 ; ; United States n=75, United Kingdom n=75, Canada n=75 85 77 85 U.S. UK Canada The COVID - 19 virus and its variants will continue to accelerate the digital transformation in the healthcare industry for as long as it remains endemic 3 - mkt average 82 %

14 P ercent of investors who say KEY DRIVERS OF FINANCIAL OUTLOOK: ADVANCEMENTS IN TREATMENT, TECH, ARTIFICIAL INTELLIGENCE/ MACHINE LEARNING 2021 Special Report: Healthcare Institutional Investors: Q17: How, if at all, do you think each of the following factors will impact the financial outlook of the healthcare industry in th e n ext 12 months? Shown NET positive T2B. Base: 3 - Market Average n=225 The following will have a positive impact on the financial outlook of the healthcare industry over the next 12 months 36 39 33 35 27 26 41 37 43 37 44 45 77 76 76 72 71 71 Treatment advancements Technological advancement and innovation Application of new technologies e.g., AI / machine learning Increasing life expectancy Application of personal health data Personalized / precision medicine Somewhat positive Very positive 3 - mkt average

ESG EXPECTATIONS ARE HIGH; CONTINUE TO BE AN INVESTOR EXPECTATION

16 Percent of investors who agree ESG MANDATES CRITICAL TO HEALTHCARE INVESTMENTS 2021 Special Report: Healthcare Institutional Investors: Q23. Please indicate the extent to which you agree or disagree with the following statements. Shown NET agree T3B. Base: 3 - market average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 My firm will not invest in healthcare companies without sufficient ESG mandates 3 - mkt average 73 % 65 79 76 U.S. UK Canada

17 Percent of investors who agree ESG PERFORMANCE KEY INDICATOR OF PREMIUM VALUATION, BETTER RETURNS, AND RESILIENCE 2021 Special Report: Healthcare Institutional Investors: Q23. Please indicate the extent to which you agree or disagree with the following statements. Shown NET agree T3B. Base: 3 - market average n=225 A healthcare company with strong ESG performance deserves a premium valuation to its share price 81 % Healthcare companies that prioritize ESG represent better opportunities for long - term returns than healthcare companies that do not 79 % A healthcare company with strong ESG performance is more resilient in a crisis 76 % 3 - mkt average 3 - mkt average 3 - mkt average

18 Percent of investors who agree HIGH INVESTOR EXPECTATIONS FOR HEALTHCARE COMPANIES TO BE PURPOSE - DRIVEN 2021 Special Report: Healthcare Institutional Investors: Q10: Thinking specifically about your firm’s investments in healthcare, please indicate the extent to which you agree or disa gr ee with the following statements regarding trust. Shown NET Agree; T3B: 3 - Market Average n=225 I must trust that a healthcare company is taking proactive action to have a positive impact on society before making or recommending an investment 84 % I must trust that a healthcare company is proactively prioritizing ESG practices before making or recommending an investment 82 % 3 - mkt average 3 - mkt average

19 Percent of investors who say MAJORITY OF INVESTORS ENGAGE IN IMPACT INVESTING IN HEALTHCARE 2021 Special Report: Healthcare Institutional Investors: Q 23. Please indicate the extent to which you agree or disagree with the following statements Shown NET Agree =T3B Agree; Base: 3 - Market Global Average n=225; United States n=75, . 76 76 68 U.S. UK Canada My firm is currently engaged in impact investing in healthcare 73 % 3 - mkt average

HEALTHCARE COMPANIES SEEN AS HAVING POOR COMMUNICATION WITH INVESTORS

21 Percent of investors who agree HEALTHCARE COMPANIES SEEN AS HAVING POOR COMMUNICATIONS 2021 Special Report: Healthcare Institutional Investors: Q24. Please indicate the extent to which you agree or disagree with the following statements regarding the information you us e t o decide on investments in healthcare. Shown NET Agree T3B; 3 - market average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 Healthcare companies have historically communicated poorly with investors in general 3 - mkt average 68 % 71 68 67 U.S. UK Canada

22 Percent of investors who agree HEALTHCARE COMPANIES UNPREPARED FOR EFFECTIVE COMMUNICATION 2021 Special Report: Healthcare Institutional Investors: Q24. Please indicate the extent to which you agree or disagree with the following statements regarding the information you use to decide on investments in healthcare. Shown NET Agree T3B; Base: 3 - market average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 64 52 68 U.S. UK Canada Most healthcare companies are unprepared to communicate effectively with investors 3 - mkt average 61 %

23 Percent of investors who use each source to assess investments HEALTHCARE COMPANIES SHOULD COMMUNICATE CLEARLY & CONSISTENTLY ACROSS MULTIPLE CHANNELS 2021 Special Report: Healthcare Institutional Investors. Q25. Which of the following sources, if any, do you use to source information regarding you or your firm’s healthcare investments? Multichoice. Base: 3 Market Average: n=225 The company’s website Investment portfolio PDF ESG Report The company’s Investor Relations website Financial filings (10 - K, proxy) Investment pipeline Report Summary/Fact Sheet ESG Microsite Communications from the C - Suite (e.g., presentations) Investor days and/or conference presentations Digital Web Report The company’s LinkedIn page 29 29 29 31 31 33 35 35 37 37 44 48 I nvestors use 5 - 6 sources on average to assess potential healthcare investments.

24 Percent of investors who agree PERFORMANCE INFORMATION CRITICAL TO HEALTHCARE INVESTMENTS 2021 Special Report: Healthcare Institutional Investors: Q24. Please indicate the extent to which you agree or disagree with the following statements regarding the information you use to decide on investments in healthcare. Shown NET Agree T3B; Base: 3 - market average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 72 79 83 U.S. UK Canada My firm will not invest in companies that do not provide sufficient operational and/or performance information 3 - mkt average 78 %

LEADERSHIP & VISION FOR FUTURE: CRITICALLY IMPORTANT TO TRUST

26 VISION AND LEADERSHIP ARE A CLOSE SECOND TO FINANCIAL PERFORMANCE WHEN BUILDING TRUST IN A HEALTHCARE COMPANY 2021 Special Report: Healthcare Institutional Investors: Q12. And which are most important to building your trust in a company of interest? Shown - at least one factor ranked Top 1/2/3. Base: 3 Market Average n=225 Financial performance Profitability History of capital allocation/investment in the business Strong financial performance compared to peers Strong growth prospects Vision and leadership Strong leadership Clear vision for the future Leadership willing to take risks Workplace environment Workplace culture fosters employee empowerment Talented employees Above - industry wages Products and services Innovative products High - quality products Good value for money Social responsibility Ahead of its peers on social responsibility Strong ESG performance Champions of DEI initiatives 24 31 33 69 75 Categories that are most important to building trust in a healthcare company I am considering investing in: Percent of investors who say

27 Percent of investors who agree TRUST IN COMPANY CEO CRUCIAL TO INVESTMENT DECISIONS 2021 Special Report: Healthcare Institutional Investors: Q10: Thinking specifically about your firm’s investments in healthcare, please indicate the extent to which you agree or disagree with the following statements regarding trust. Shown NET Agree; T3B. Base: 3 - Market Average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 85 87 88 U.S. UK Canada I must trust a healthcare company’s CEO before making or recommending an investment 3 - mkt average 87 %

28 Percent of investors who agree TRUST IN COMPANY BOARD OF DIRECTORS CRUCIAL TO INVESTMENT DECISIONS 2021 Special Report: Healthcare Institutional Investors: Q10: Thinking specifically about your firm’s investments in healthcare, please indicate the extent to which you agree or disagree with the following statements regarding trust. Shown NET Agree; T3B Base: 3 - Market Average n=225 ; United States n=75, United Kingdom n=75, Canada n=75 81 79 85 U.S. UK Canada I must trust a healthcare company’s Board of Directors before making or recommending an investment 3 - mkt average 82 %

RECOMMENDED ACTIONS

3 4 2 1 5 RECOMMENDED ACTIONS FOR BUILDING AND MAINTAINING TRUST WITH HEALTHCARE INVESTORS Highlight stability of company within healthcare industry as we enter recession Emphasize performance, growth trajectory and industry impact since COVID - 19 pandemic Communicate catalysts and milestones that drive continued progress Examine & showcase impact of innovation strategy, especially around technology Clear and consistent articulation of strategies around treatment advancements, tech innovation, AI, and ML with the impacts to business bottom line are important to normal course communications as well as for reinforcement through thought leadership Prioritize the ESG mandate as a core element of investor communications Ensure strong positioning of and updates on ESG program, including impact Recognize the import of consistent ESG reporting Deploy clear, consistent IR collateral & leverage a multi - channel communications strategy to educate investors Ensure IR materials and website are user - friendly, educate, and drive conviction in the investment thesis Leverage a multi - channel communications strategy for communicating both normal course and transformative events Showcase corporate vision, performance, and strong leadership, as well as strategic hiring decisions, to build trust and encourage investment Highlight leadership through earnings and operational updates, leverage C - suite and Board appointments, and showcase execution of strategy across communications.