#1 Investment Sidebar Snapshots

Over the past few weeks, I've gathered several interesting topics that aren't quite long enough for a dedicated newsletter. So, I'm launching Investment Sidebar Snapshots, a new section that will compile these diverse insights.

Think of it as an ongoing journal where I'll share these snippets periodically!

DISCLAIMER: This article is not a recommendation to buy or sell any financial instrument, the content is educational and my personal opinion. Each person has to make his own analysis. Any action or decision you take as a result of viewing this article is your sole responsibility.

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Executive Summary

• Samsung Biologics Biosimilars Business Spin-off

• Incentives When Taking GLP-1 Treatments

• Beyond the Headlines: My Thoughts on Alphabet

Samsung Biologics Biosimilars Business Spin-off

Last week it was reported that Samsung Biologics will spin-off its biosimilars development unit into a single entity, tentatively named Samsung Epis Holdings. The spin-off is set to be completed by 1^st of October.

The spin-off comes as a mitigation of the industry concerns over inherent conflicts of interest. Samsung Biologics works on contract for many large pharmaceutical companies, yet Samsung Bioepis develops biosimilars directly competing with those same companies' drugs as their patents end.

This spin-off will establish the CDMO and biosimilars operations as distinct entities, providing shareholders with the flexibility to invest in each independently. Moreover it also brings two catalysts that could lead to shareholder value creation & realization:

1. With around a 5% of market share in the CDMO market, Samsung Biologics is the 3^rd largest pure-play CDMO after the Swiss Lonza AG and the Chinese WuXi Biologics. If the BIOSECURE Act were approved in the USA, Samsung Biologics´ scale and know-how would place it in the perfect place to increase its market share over WuXi Biologics.

2. By operating as independent CDMO and biosimilars entities, the spin-off could enhance demand for Samsung Biologics' services. This separation derisks customers by making it harder to shift their manufacturing to a cheaper competitor later.

I think this business development opens an interesting investment opportunity in a company that I would expect to grow faster than the CDMO market.

Incentives When Ongoing GLP-1 Treatment

The market's anticipation of success for GLP-1 treatments has always heavily revolved around their efficacy, measured by reported weight loss. Second-generation GLP-1 treatments have achieved remarkable weight loss, establishing a new efficacy threshold that earlier treatments failed to meet, thus driving their success.

However, the various stakeholders involved in GLP-1 treatment prescriptions have more complex incentives than simply achieving a patient's weight loss target.

Patients

This group is most significantly influenced by the achievable weight loss and related marketing. They may not be fully informed about the complexities of obesity, its related diseases and complications, or the full benefits of GLP-1 treatments.

As it has been observed with the compounding phenomena in the USA, at least 30-40% of the market has been acquired by this type of treatments. Hence, there is a large share of the market which is price sensitive to the $936 to $1,349 per month that uninsured GLP-1 treatments cost.

A significant number of patients pursue GLP-1 treatments solely for cosmetic purposes. Ozempic's explosive growth, in particular, was largely cemented by its popularity on social media, directly contributing to the reported increase in medical aesthetics treatments, as noted by McKinsey.

Consequently, price-sensitive and aesthetically-focused patients are incentivized to achieve the maximum weight loss benefit as quickly as possible, aiming to halt the financial burden of treatment. This desire to reach a specific aesthetic by a certain date, perhaps as part of a broader transformation, follows the same logic. This behavior is also rooted in a common misconception among patients (and their doctors): that obesity is purely an aesthetic problem that can be 'fixed,' and the new weight maintained solely through self-discipline.

Doctors

Doctors are more heterogeneous group that one might think of at first glance:

• General Practitioners

  Many general practitioners mistakenly view obesity primarily as a behavioral issue stemming from a lack of self-discipline, impacting only patients' aesthetics. Furthermore, there's a historical reluctance to treat obesity with medication, rooted in past concerns with amphetamines in the 1980s and the market withdrawal of Acomplia in the 2000s due to safety issues.

  Moreover, there are countries like the USA, where GPs are susceptible personal liability in case of patients mistreatment.

  Therefore, for this group, the incentive shifts from offering an effective treatment to prioritizing safety, particularly when they might lean towards recommending fundamental lifestyle changes such as balanced diets and regular exercise.

• Specialists

  Specialists, such as endocrine doctors, possess extensive knowledge of obesity and its treatment, leading them to seek benefits beyond mere weight management. They highly value improvements in outcomes like cardiovascular health and fat control, including conditions such as MASH/NASH.

  Specialists play a crucial role as they often establish the prevailing medical doctrine. This is especially relevant in countries like France, where the prescription of treatments like GLP-1s is restricted to specialized clinics.

Insurances, PBMs and Government

These institutions, much like specialists, prioritize cost reduction and increased efficiency. Consequently, treatments supported by strong evidence that both improve outcomes and tackle co-morbidities associated with obesity will be better positioned to secure access and comprehensive coverage from them.

This approach is underscored by CVS Health PBM's recent move to include only Wegovy as an approved weight loss treatment on their formularies. Crucially, market access for pharmaceuticals is evolving from conventional reference or margin pricing models towards value-based mechanisms, placing greater importance on evidence demonstrating the prevention of adverse events and comprehensive patient improvement.

Consequently, while the stock market heavily focuses on weight loss when anticipating a drug's success, the scientific and commercial players in the market are more incentivized to prioritize benefits for other related conditions.

Beyond the Headlines: My Thoughts on Alphabet

I have been an $GOOG ( ▼ 1.44% ) shareholder since almost three years ago when I built a position during Q4 2022 & Q1 2023. While the

Google IO Event

Two weeks ago Google hosted its Google I/O event, Google's annual developer conference, where the company unveils its latest products, technologies, and innovations. See the event summary below.

The event was overwhelmingly focused on Artificial Intelligence (AI), showcasing its deep integration across Google's entire product ecosystem.

A core theme was the advancement of Gemini, Google's family of AI models. Key updates included Gemini 2.5 Pro with "Deep Think" for enhanced reasoning, and the faster, more efficient Gemini Flash. These models are powering new capabilities like AI Mode in Search, a chatbot-like experience providing comprehensive, summarized answers. AI Overviews, the AI-generated summaries at the top of search results, are also expanding globally.

Google unveiled powerful generative AI tools such as Imagen 4 for images, Veo 3 for video (now with integrated audio), and Flow, an AI filmmaking tool. The conference also highlighted progress in AI agents, including "Deep Research" for web queries and "Gems" for custom AI assistants.

AI's presence extended to Android, with significant updates to Android 16 focusing on AI integration, and the continued expansion of Gemini across devices like TVs and cars. A major announcement was the push into Extended Reality (XR) with Android XR, including the Project Moohan mixed-reality headset (with Samsung) and new smart glasses, both leveraging Gemini.

For developers, new tools like Google AI Studio integrating Gemini 2.5 Pro, Stitch for AI-powered UI design and code generation, and the generally available Gemini Code Assist were introduced, all aimed at simplifying AI development.

Overall, I/O 2025 cemented Google's vision of an AI-first future, where intelligence is pervasive across its products and platforms.

Search Market Share

April 2025 marked a significant moment for Google Search, as its market share dipped below 90% for the first time in ten years, a decline widely presumed to be at the expense of growing chatbot solutions, where Gemini roughly holds a 2.5% market share.

My Current Thesis

Many anticipate a full paradigm shift from traditional query-link search to prompt-chatbot interactions. I argue that the speed of this transition is more critical than its occurrence. Transition speeds are often overestimated, and an overly rapid change can severely impede an entity's maneuverability. Google, however, has not experienced such an abrupt upheaval. Instead, it has used the last two years to make significant strides in its AI product development and ecosystem integration, as clearly demonstrated at the recent Google I/O event.

Moreover I believe a hybrid scenario is the most plausible future. Let me break it down:

1. Informational queries: Account for the majority of searches at approximately 51.8%. These users are seeking knowledge or answers to questions.

2. Navigational queries: Make up about 33.0% of searches. These users are looking to find a specific website or page (e.g., typing "YouTube" to go to YouTube). I don´t expect any major change among this segment as users could directly type the website URL as the fastest way to the website but still use Google.

3. Commercial queries: Represent around 14.5% of queries. These users are in a research phase, investigating products or services before a potential purchase (e.g., "best laptops for gaming").

4. Transactional queries: Are the smallest category, at just 0.69%. These users have a strong intent to complete an action, such as making a purchase (e.g., "buy iPhone 15").

However, the revenue is inversely distributed. Commercial & Transactional queries represent 70-90% of Alphabet´s revenue, while informational represent 10-30% and navigational under 5%.

Navigational queries I don´t think are at risk because they are the most embedded ones a user´s habits. They could choose to directly type the URL in their navigator.

Informational queries I like to split them between Doubt solving queries and Deep research queries. What do I mean by this?

Doubt solving queries are those queries related to solving a single specific doubt which arises at a certain moment. E.g. You want to check the weather forecast for tomorrow. These queries will not suffer from AI chatbots in my opinion because Google Search, especially now with AI overviews, provides good answers with the highest convenience.

Deep research queries are the ones related to an investigation of a certain topic which learning about it will lead to new doubts and further questions following. E.g. Researching about your next vacation or a new home appliance you want to buy.

AI chatbots, in my view, offer a substantial opportunity to monetize a wider range of queries, potentially through subscription revenue models, and to increase the search market's TAM. Providing better answers can save users time and significantly boost engagement, a trend already hinted at by Google's reported 10% usage increase for queries with AI Overviews. Additionally, shifting many currently non-monetizable queries to AI chatbot platforms should improve Google Search's efficiency and performance.

Finally, transactional queries will not totally migrate to AI chatbot solutions for two reasons:

1. Potential buyers don't always know what they want to buy or which specifications they need, for which traditional search offers a reasonably good self-discovery experience. In my opinion, social networks pose a more significant risk to traditional search in this area.

2. Making the right prompt to find the item you envision can be more challenging than anticipated, hurting engagement.

When we account for the uneven impact of AI chatbots across query types, the projected expansion of the total addressable market (TAM), the shift of non-monetizable queries to viable business models, and Google's strategic advantage in pushing AI products through its expanding ecosystem, there's compelling evidence. This indicates that, at worst, Google will not vanish, even as the third player in the AI chatbot search arena – a position not unlike its historical standing in the OS and browser sectors.

The current share price, showing a considerable discount compared to other 'Magnificent Seven' companies and factoring in Google's growing business segments like YouTube, Google Cloud, Waymo, and Google devices (Pixel phones, for instance, grew from 1% to over 2% market share in a year), strongly supports the investment case for this high-quality company. High-quality companies, after all, can typically only be acquired at attractive valuations when uncertainty dominates the market narrative.

Hope you enjoyed this first post of the Investment Sidebar Snapshots. Don´t forget to let me know in the comments if you like this type of newsletters!

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