Fidelity Portfolio Manager Eddie Yoon believes the stocks of certain specialty drugmakers have promising drug candidates in clinical trials, potentially setting them up for a healthy outlook and outsized growth.
“Recently, I’ve been seeing a lot of ‘green shoots’ in some novel, viable drug candidates under study by biotechnology and specialty drug manufacturers, which gives me optimism about growth prospects for this innovation-driven segment of the health care sector,” says Yoon, who manages Fidelity® Select Health Care Portfolio (FSPHX).
In helming the sector-based, equity-focused strategy since 2008, Yoon leverages Fidelity's global health care team in building a broad portfolio of health care companies, ranging from high-quality, stable earnings growers to opportunistic names producing innovative products that disrupt the marketplace.
As of March 31, the fund was notably overweight biotech stocks relative to the sector index, with sizable positions in a handful of specialty drugmakers. “Anti-obesity drugs may have taken center stage in 2024, but recent breakthroughs in biotech could be game-changers in the coming years,” Yoon explains.
In particular, Yoon is drawn to biotechs reporting needle-moving clinical data in blockbuster categories. These so-called specialty drugs, which typically are new drug categories that start at a higher price, have achieved recent sales growth of 15% to 17% per year, according to Yoon. In addition, he notes that biotech firms have been supported by a decrease in the cost of genome sequencing, the expansion of cell-based therapies and the accelerated pace of drug discovery.
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Yoon cites two companies, Alnylam Pharmaceuticals (ALNY) and Netherlands-based Argenx (ARGX), as particularly well-positioned, both of which were among his largest holdings at the end of March.
“Alnylam is a leader in RNA interference, a type of therapeutic that can ‘silence,’ or turn off, the production of specific genes that contribute to or cause a disease,” Yoon says. “The company focuses on treating rare diseases and those with unmet medical needs, such as transthyretin amyloid cardiomyopathy, a potentially fatal heart ailment that occurs when faulty proteins build up in the heart.”
Argenx primarily develops antibody-based therapies for autoimmune conditions, including diseases causing muscle weaknesses. In 2024, the company benefited from robust sales of Vyvgart®, Argenx’s flagship treatment for a rare autoimmune disorder in which a body's immune system attacks muscle cells, according to Yoon, who also notes the company released positive phase 2 trial results for Alkivia, its candidate for severe autoimmune diseases.
Both Argenx and Alnylam have drug candidates that are fully funded into approval, Yoon says. “Within biotech, I focus on the most innovative assets in cell therapy, rare disease and immuno-oncology, and I believe these two companies have among the most promising growth prospects,” Yoon concludes.
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Eddie Yoon is a sector leader and portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Yoon is responsible for the coverage of health care equipment and supplies stocks and serves as the health care sector leader. Additionally, he manages several funds including Fidelity Advisor Health Care Fund, Fidelity and Fidelity Advisor Stock Selector Mid Cap Fund, Fidelity and Fidelity Advisor All Cap Fund, Fidelity Select Health Care Portfolio, Fidelity Select Medical Technology and Devices Portfolio, Fidelity Advisor Health Care SMA, and Fidelity Disruptive Medicine ETF.
Prior to joining Fidelity in 2006, Mr. Yoon worked on the health care team at JPMorgan Asset Management. He has been in the financial industry since 2002.
Mr. Yoon earned his Bachelor of Arts in business economics from Brown University.