Vaccines and biopharma have held the spotlight over the last year, and throughout the pandemic, many investors remain hopeful that their portfolios will continue to grow with ongoing distribution of COVID-19 vaccines from companies such as Pfizer, Moderna, AstraZeneca and Johnson & Johnson.
The biopharma industry has created a rippling impact on the market, placing a broad basket of stocks in very favorable positions. Along with the big pharma names, there are many smaller companies that are benefiting from the overall increase in stock values. Analysts from the Bank of America noted that companies that deal with the manufacturing of syringes have also witnessed “explosive growth.”
Last month Market Study published a report that found the global COVID-19 vaccine market will reach a net worth of over $25 billion within the next three years; “North American firms were expected to lead the market in this regard, with European and Asian firms following close behind.”
The ongoing demand for vaccines and recent threats of coronavirus variants have been influencing the success of the pharma market. Last year the Bank of America Corporation (NYSE: BAC) predicted that “more than 1.5 billion coronavirus vaccines will be distributed across the world in 2021 as vaccine makers ramp up production to meet increased demand.”
Shares of big-name companies such as Pfizer (NYSE: PFE), BioNTech (NASDAQ: BNTX) and Moderna (NASDAQ: MRNA) “jumped 13%, 220% and 720% respectively since they announced that their COVID-19 vaccines had passed clinical trials” The NASDAQ Biotechnology Index reached a low last March but since has grown by 30%.
Investors should still be cautious of this growth as the availability of raw materials for vaccines could potentially stagnate the growing pharmaceutical companies have been experiencing. In March, the chief of Serum Institute which is based in India, mentioned the “US restrictions on the export of raw materials needed for the COVID-19 vaccine. The restrictions had been put in place to help US-based companies get access to the material first.”
The global market has been witnessing ongoing “vaccine nationalism” which is becoming a prevalent issue that needs to be addressed sooner than later before companies that operate outside the United States suffer from export restrictions.
India is one of the most affected countries by the pandemic and continue to face alarming threats due to the new variant. If there are shortages of raw materials for vaccinations, India will be placed in a strenuous position socially and economically.
Governments across the globe have been adjusting their priorities throughout this pandemic which has caused financial implications that have impacted investors as well. Many have diversified their portfolios over the last year and moved towards industries such as pharma and tech with hopes that growth is sustained during such a turbulent time.
With the ongoing change of the global financial landscape, experts are noticing that the entire hedge fund industry is witnessing change which is a strong indicator that investors should keep an eye on. Over the last decade, hedge funds have been struggling to “keep up with unhedged returns of the market indices.” But recently, Insider Monkey identified “a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017.”
Aside from the big 5; Pfizer (NYSE: PFE), BioNTech (NASDAQ: BNTX), Moderna (NASDAQ: MRNA), AstraZeneca (NASDAQ: AZN), and Johnson & Johnson (NYSE: JNJ) there are other companies that are still worth investing in as the market continues to experience impressive growth as 2021 progresses.
Novavax Inc. (NASDAQ: NVAX)
The drug company known for working on the development of nanoparticle vaccines and adjuvants, aiming to cure COVID-19, Ebola, seasonal influenza and many other infectious diseases.
In March the firm announced that the vaccine they developed has a 96% efficacy against COVID-19 and is effective against variant strains of the coronavirus as well which makes it one of the most highly effective vaccines on the market. The British government recently announced that “10 million doses of the Novavax vaccine would be produced and packaged in England.”
The development of the Novavax vaccine led to a 9% surge in shares and the company now has a market cap of “$14 billion and annual revenue near $500 million.” By Q4 2020, “37 hedge funds in the database of Insider Monkey held stakes worth $1 billion in the firm, up from 36 in the preceding quarter worth $611 million.”
CureVac (NASDAQ: CVAC)
Focusing on the development of therapies based on messenger RNA, the German-based biopharmaceutical company, founded in 2000, makes vaccines for infectious and rare diseases along with drugs for cancer treatment. CureVac is “famous for the development of MRNA based novel therapeutic antibodies, prophylactic vaccines to prevent picornaviruses, influenza, malaria, rotavirus, Lassa virus and yellow fever.”
The firm collaborates with several biopharma companies when it comes to research and development, and has also been working on a program for a COVID-19 vaccine which is in the final stage of clinical development. CureVac has already entered into agreements with other pharma giants with hopes to produce more than 300 million doses of the vaccine by the end of the year.
Inovio Pharmaceuticals (NASDAQ: INO)
Pennsylvania-based Inovio Pharmaceuticals is a biopharma firm that creates synthetic DNA products for treating cancers and infectious diseases. Their “DNA products make use of special SynCon optimized plasmids to help break the tolerance of cancerous or infected cells in an immune system. It also facilitates cross-strain protection against unmatched and matched pathogen variants.”
In April, the firm’s shares went up 17% when Inovio announced they have developed a DNA COVID-19 vaccine that protects against the original strain of the disease as well as several other variants such as the ones found in the UK, South Africa and Brazil.
Gilead Sciences (NASDAQ: GILD)
The California-based biopharmaceutical company focuses on “the research and development of antiviral drugs used in the treatment of HIV, hepatitis B, hepatitis C, and influenza, including Harvoni and Sovaldi.”
Bloomberg reported in June 2020 that “a rival vaccine firm had approached Gilead about a potential merger rumored to be worth $240 billion.”
Abbvie Inc (NYSE: ABBV)
Founded in 2013, the Chicago-based pharma company that is predominately known for producing Humira, an immunosuppressant that is used to treat arthritis, is also starting to market two new drugs in oncology and immunology. The company has seen an increase of over 184% in stock value and is one of the few with “stocks that have managed double-digit payout increases this year.”
Reuters reported that “Abbvie was putting a plan in place with the advice of investment bank Morgan Stanley for selling off a $5 billion portfolio of drugs it acquired last year. At the end of the fourth quarter of 2020, 83 hedge funds in the database of Insider Monkey held stakes worth $696 million in the firm, up from 82 in the preceding quarter worth $629 million.”
Biopharma is not the only industry that is benefiting from pandemic; companies such as Tesla, Dell Technologies, DocuSign, Okta, Nvidia Corp, PPG Industries, Alcoa Corp, Nuance, PPD Inc, and Wells Fargo & Company have also seen notable increases in their market shares which could result in long-term portfolio growth for investors by the end of the year.
By Surina Nath