How Do I Invest In The Pharmaceutical And Biotech Sector? – After the outbreak, a race began to develop a vaccine against Covid-19. Since then, the pharmaceutical industry has continued to be in the newspapers and on everyone’s lips and hands.
The share price of the company that crossed the first line rose sharply. But at the same time, when some information came out to doubt their work, they lost several points in one day.
How Do I Invest In The Pharmaceutical And Biotech Sector?
The biotechnology sector is known as an attractive investment. In fact, perhaps the world’s most famous investor, Warren Buffet, has been betting on them for years. Look at the pros and cons of these companies before looking at the current situation.
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The first thing to remember is that drug research and development is time consuming and expensive. It usually takes 10 to 15 years to get a drug or vaccine approved by the European Medicines Agency (EMA) or the Food and Drug Administration (FDA) in the United States and costs about $2.6 billion. Yes, 10 years! The fact that we were vaccinated against the virus in less than a year was unprecedented.
These drugs go through three stages of clinical trials, which scientists confirm are effective and safe – meaning that their benefits outweigh the possible side effects. As you can imagine, most projects do not build in this way, especially in the beginning. This is just a waste of money, so when the drug comes out, these companies try to increase profits.
In addition, after passing all these tests, the regulatory body must approve. An example of this is the Russian vaccine Sputnik V now: it is being evaluated by the EMA.
If they agree and the drug is sold, it may or may not be successful. As with any drug, one must find a market for it and get government and health insurance to pay for it. The difference is that in this case there is time pressure because the pharmaceutical company has a license for only 20 years. During this time, the company must return its investment and make a profit. After that, a large company can produce their brand at a lower cost.
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And even if the drug is approved, there is still a risk of undiagnosed side effects that could lead to its withdrawal from the market. It is not unusual to see pharmaceutical companies facing lawsuits from the media all the time because their products are considered unsafe. Recently, for example, a large class of people in California sued Johnson & Johnson, Teva Pharmaceutical, Endo International and AbbVie. They were accused of causing the alcoholism epidemic by hiding the fact that their painkillers contained drugs.
In some cases, companies will change the formula of a drug and bring it to market, but by then the drug may have been replaced by a competing drug.
To give you an overview of these companies, we will discuss four companies that you may be familiar with because you have used their products or seen them in the news.
The New York-based pharmaceutical company was founded in 1849 and is known for one of the most popular drugs in the world, Viagra. It also produces a long list of drugs, from anti-inflammatory drugs to cancer drugs, as well as many preventive drugs, which generate more than a billion dollars a year. These include Listerine mouthwash, the antidepressant Zoloft or Lipitor, which is a cholesterol-lowering drug. By the way, it recently lost the patent for Viagra, which makes up a large part of its revenue.
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Last year, Pfizer became a co-developer of a Covid-19 vaccine developed by Germany’s BioNTech. Although it is true that the prices have doubled in the last 10 years, the last year has seen a remarkable fluctuation. Earnings were good, but earnings per share were slightly lower than expected. In 2021, Pfizer expects that sales of the Covid-19 vaccine will reach $26 billion, a 73% increase from last year.
AbbVie was born as a spin-off from Abbott Laboratories, dedicated to the research and development of medicines. They split it into two companies shortly before Humira’s patent expired in Europe. This is the best selling drug in the world and they want to avoid spending money on Abbott. Anti-inflammatory drugs account for half of the company’s sales. AbbVie also developed Skyrizi for psoriasis and Rinvoq for arthritis.
AstraZeneca was born in 1999 from the Swedish company Astra AB and the British group Zeneca. The pharmacy manufactures drugs for the treatment of cancer, heart, respiratory and neurological diseases, among others.
Despite the creation of the first vaccine against Covid-19 – together with the University of Oxford – this year they did not do as well as their competitors. First there were doubts about its power and then there were doubts about its results. The EU also sued AstraZeneca for failing to meet vaccine delivery deadlines. Unlike Pfizer, this vaccine was developed without profit, considering that 97% of its development was funded by the public budget. However, now it seems they are not paying the price at all.
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But its effectiveness does not depend on the vaccine alone. If you look at his work in the last 10 years, you can see that his assets have doubled.
A new company. Moderna is an American biotechnology company focused on the development of RNA drugs. This technology is being used and abandoned by other companies because of the problems that make this product impossible. When it went public in 2018, it managed to raise $600 million by selling its 8% stake, raising the company’s value to $7.5 billion, making it the company’s largest IPO. Biotechnology industry to date.
The Covid vaccine was Moderna’s first product to hit the market, and it reported an initial profit of $1.73 billion. By 2021, it expects to receive $1.9 billion in revenue from the commercial agreements it has already signed.
Moderna now wants to use this technology for more vaccines on the ground. These predictions are the best ever in the industry, which is why stock prices have risen more than 400% in just two years.
Is It A Good Time To Invest In Pharmaceutical And Biotech Stocks?
Investing in pharmaceuticals is a risky bet. As mentioned above, these are companies that require a lot of money and time to start making a profit, and many things can cause their prices to fall sharply.
For several weeks, for example, political leaders in the United States and Europe have been debating whether to remove the patents on the Covid-19 vaccine to allow more people around the world to use it and treat the epidemic as quickly as possible. Moderna says it won’t affect earnings, but both its shares and Pfizer’s have fallen slightly since the news broke.
Many of them have been successful for many years, but as we have said before, success does not guarantee the future. A pharmaceutical company that is doing well today may lose the patents on its best-selling drug in a few years, and unless it develops a successful new drug, it may not recover. Therefore, it is necessary to evaluate not only how many drugs are on the market, but also how many are under development.
Investors are starting to turn to large companies with a broad pipeline because it is a way to diversify and reduce risk.
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From your program you can invest in pharmaceutical companies such as Pfizer, AbbVie, Moderna and AstraZeneca, as well as Merck & Co, Bayer, Bristol Myers Squibb and Johnson & Johnson, among others. The choice to do this is always yours.
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GmbH provides support for the purchase and sale of financial instruments in the field of foreign exchange according to § 1, Section 1a, two sentences. 1 for all KWG instead of Solaris SE. GmbH is registered as a “subsidiary” of Solaris SE within the meaning of § 2, Section 20 of the KWG in the registration maintained by the German Federal Financial Supervision Authority (BaFin). Registration can be done at www.bafin.de. The outbreak has sparked interest in the pharmaceutical and biotechnology industries, and the price of their shares has risen sharply.
Major pharmaceutical players continued to perform well until 2022.