Biopharma companies have been among the top picks for stock market investors in 2020, as the COVID-19 pandemic created a huge demand for cures and vaccines. The race started at the beginning of the year and already there are several results which can certainly arouse optimism for control over the pandemic by 2021.
Considering there is still unexplored potential in the biopharma sector, 500investments would like to share a comprehensive review of some of the leading brands, as well as several insights into the stock market, now that prospects have improved and investors are trying to understand what 2021 will bring with it.
Long-term opportunities in the biopharma sector?
The spread of the Coronavirus has made matters very complicated for health experts, and epidemiologists suggest it will very likely become endemic. Since the world will probably need to get accustomed to the disease, therapeutics and vaccines will become widespread, especially among people with underlying conditions or healthcare workers constantly exposed.
Achieving herd immunity will require around 70% of the global population to have antibodies in their system and since that is improbable, most countries have already developed vaccination plans, given the first vaccine doses are due to be delivered later in December. Here are some of the companies that will benefit from high demand in the near future.
Several weeks ago, Pfizer announced that its COVID-19 vaccine was over 90% effective and since then, the company has already applied for emergency approval in the US, the EU, and the UK. As of now, Britain has already given the green light and other public agencies are expected to follow on the same path.
MHRA, the country’s medicine regulator, said the Pfizer’s vaccine is safe enough to be distributed and the first 800,000 doses will be available from next week, according to the BBC. Even though it wasn’t part of Operation Warp Speed, Pfizer ended up being the first company to develop a COVID-19 vaccine and its stock performance has been positive throughout the year.
Currently trading at around $40, the stock has recovered from the March drop and managed to even break above the January 2020 high, as investors were pilling into healthcare-related assets. The price is heading up parabolically, suggesting there is a strong buying momentum.
Johnson & Johnson
Another company that could provide an effective vaccine is Johnson & Johnson. The US-based brand recently started a rolling submission with the European Medicines Agency for its single-dose COVID-19 vaccine. Even though there are already other companies that completed the stage 3 trials, in the case of J&J, the vaccine rollout could occur during the first quarter of 2021. The company enjoys an established reputation, and with a $388 billion market capitalization, it is currently among the largest biopharma brands in the world.
When compared to other related stocks, J&J has been trading in a range of $156 and $135 since April, after managing to erase the March losses. 500investments believes the prospects are still favorable for the stock, considering the selling has been contained. Building pressure on the April high might suggest buying momentum improved, signaling more gains in the medium to long-term horizon.
Aside from the companies looking to develop vaccines, some have focused on therapeutics, which carry the advantage of easier approval requirements. The drug industry was brought together by the COVID-19 pandemic and its quest to find solutions for severely ill patients has already generated positive results.
AbbVie is one of the top biopharma companies, currently part of a clinical program dubbed I-SPY COVID, which includes other brands like Amgen and Takeda as well. AbbVie contributed with the experiment of its nonalcoholic steatohepatitis drug Cenicriviroc, to see if it could generate immune reaction for COVID-19 infected patients in critical conditions.
With more than $39 billion in revenue during 2019, AbbVie is currently the 10th largest biopharma company in the world and a popular stock for the US and global investors. With a $183 billion market capitalization and a $104 share price at the time of writing, ABBV has been trending among market participants looking to gain exposure to biopharma in 2020.
The bottom line
Faced with persistent demand for COVID-19 cures, biopharma companies have the potential of increasing their revenue as long as they manage to deliver highly competitive products. In terms of stock market trading for these brands, the road will very likely be bumpy, given the fierce competition.
Each time a company announced positive results for a vaccine, competing stocks were under pressure, which means there is going to be a race to constantly improve. This is good news for people since things can get back to normal sooner than expected. Overall, biopharma is projected to remain a trending sector for the next few years and that would continue to direct flows from the investing community.