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Vaccine for the markets! Hunting.

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Vaccine for the markets! Hunting.

On the hunt for a vaccine for the markets

Have they discovered the vaccine for COVID-19?.

Gilead is one of the latest pharmacies coming back to the trading floors. This sector, however, is not spared from volatility. During these days of confinement, globalization has given proof of life where it does best: the financial markets. 

Stat, an American newspaper specializing in medicine, mentions a drug that could cure coronavirus. The news has gone around the world and it boosted stock market profits in just a few hours.

The mysterious drug

It’s called Remde Sivir, and it is being developed by the Gilead biotechnology company. For the moment, its results are not conclusive. But it doesn’t matter: with this pandemic, we all cling to every little ray of hope that science offers us. And so did the Stock Exchanges; only a vaccine can save us from the economic disaster we are trapped in. 

The race to find a remedy for COVID-19 has involved the US, China, and the EU. And the markets are lurking to find a business opportunity in times of great volatility. The company that gets it first will get the prestige; the investor who first detects it will take the money.

Gilead in Wall Street

Despite Gilead’s incredible rise this Friday, (its shares gained more than 10% during the opening of the NY Stock Exchange), Juan Figares, an analyst at Link Securities, is not so sure these companies will necessarily skyrocket their prices: 

“we will need to see to what extent these products are profitable; With the threats of interventionism in many countries, the possibility of them becoming generic is high”

The pharmaceutical vaccine sector and Coronavirus 

The pharmaceutical sector has not escaped the market collapse caused by the pandemic, but its fall has been lighter, and its recovery faster. Sergio Ávila, an IG analyst, recalls that it is a defensive sector, so it doesn’t go through the ups and downs of consumption. Unlike Figures, he believes pharmaceuticals still have a lot to offer:

 “The Gilead case is not a mirage. It is a sector we need to focus in at the moment ”

Large companies, such as Johnson & Johnson, Pfizer, or Roche, have invested large sums trying to fight the virus. The first has already announced it will have between 600 and 800 million vaccines by 2021, according to the North American press.

So far, the stock market has rewarded them: Johnson & Johnson shares have fallen less than 2% since February, while the Dow Jones has lost 19% in the same period.

Some figures:

In Spain, figures are still modest, but there is also an important research effort the markets are already rewarding. Ana Gómez, an analyst at Renta 4 specialized in the pharmaceutical industry, believes this crisis will improve citizens’ and investors’ opinions on the sector: “There will be good opportunities” she assures.

As an example, PharmaMar shot up 33% on March 15 after announcing positive results on the use of antitumor drugs against the virus. After that day, its share was 3.35 euros; this Friday, it closed at 4.41. Among the smallest, Laboratorios Rovi stands out: It agreed with HM Hospitals to test Bemiparin as an anticoagulant for COVID patients, and it has recovered almost all of its lost value.

Many analysts believe, however, that these increases are temporary. The key is to detect them before they occur, so investors can extract the profits as soon as they are made. That is the philosophy of Javier Molina, from eToro Spain. 

“Finding a vaccine is the only way to stop the health crisis, but many times stocks rise with a rumor and fall with the news” 

In the case of Gilead, both rumors and news have agreed. The conclusions will not be ready until May, according to the Financial Times. Then we will know if Remdesivir is the solution, and the vaccine all markets need.

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