GlobalData Report: Top 20 Pharma Companies Lost About $2.6 Trillion in Market Cap in Q1

 

The COVID-19 pandemic is having a devastating effect on global business and biopharma companies are not excluded. A report by GlobalData found that the majority of the top 20 global pharma companies had their combined market cap plunge by $2.6 trillion in the first quarter of 2020, or about 7.9%.

Johnson & Johnson plunged 10%. Switzerland-based Roche actually had an increase of 3.6%, but Novartis was down 10.1%, Merck & Co. fell 15.7%, and Pfizer was down 16.7%.

“The reversal of fortune, due to COVID-19, may seem dramatic due to these companies’ long-term growth,” said Peter Shapiro, senior director of Drugs and Business Fundamentals for GlobalData. “However, the effect on the pharmaceutical industry has been mild compared to other industries.”

The biggest drop on the list was by Germany’s Bayer AG, which fell by 28.5%. The best responder was Regeneron Pharmaceuticals, which rose 32.5% from the fourth quarter 2019 to this year’s first quarter.

“Companies are adapting drugs originally developed as follow-on drugs for chronic autoimmune disorders to mitigate the cytokine storm syndrome (CSS) of the immune system, which is associated with the worst cases of COVID-19,” Shapiro noted.

That is likely why Regeneron is weathering the pandemic reasonably well so far, because of its evaluation of its anti-inflammatory drug Kevzara for COVID-19. It is currently in a Phase II/III clinical trial of severe COVID-19. However, Regeneron’s development partner for the drug, Sanofi, took a hit of 11.9%.

Gilead Sciences climbed 14.5%, which should probably not be a surprise. The company’s experimental antiviral, remdesivir, is currently the best first hope for a treatment for COVID-19, with early trial data expected in the next week and additional controlled trial data out in early May. A leaked video from the early trial out of the University of Chicago Medicine suggested the drug was showing early recoveries in fever and respiratory symptoms. There are concerns that there are no control patients in this trial, but the news so far is definitely raising expectations. The company is urging caution, however.

Shapiro points out that Roche is only showing moderate gains, 3.9%, although its anti-inflammatory tocilizumab is also in clinical trials for CSS related to COVID-19. Roche’s diagnostics division was granted one of the earliest Emergency Use Authorizations (EUAs) for the U.S. Food and Drug Administration (FDA) for COVID-19 testing. The company’s chief executive officer, Severin Schwan, has tended to offer gloomy notes on the industry’s response to the pandemic, not only for Roche, but for a broad array of companies in general, expressing concerns over the ability to launch the needed broad testing and criticizing some of the antibody tests being offered by some of his (unidentified) competitors.

In general, biopharma has been aggressively pivoting to develop vaccines and test experimental drugs and existing drugs against the disease, while working to scale up manufacturing while maintaining supply chains. However, the industry has begun calling for more government funding and wider coordination.

David Loew, executive vice president of Sanofi Pasteur, one of the top vaccine manufacturers in the world, indicated governments would need financial commitments in the billions to underwrite the acquisition of the most promising vaccines even before proof they were viable.

“If the industry does not know if there will be a market in 18 months, [it] cannot carry all [the costs],” he told the Financial Times. “Industry alone can’t provide all the investment needed now for billions of doses.”

At least some of the concern is that without greater funding and coordination, the companies won’t be able to buy sufficient raw materials, continue production of existing drugs and quickly scale up their capacity to meet the demand of new drugs and older therapies around the world.

“This is a global issue,” said Seth Berkley, head of Gavi, a multilaterally-backed vaccines fund. “We need an agreement on global access and manufacturing at risk [of uncertainty over the results] to purchase very large quantities at low prices for distribution in low-income countries.”