Global Top 20 Pharma Companies See 10.2% Market Cap Growth in Q2 as Industry Enters Post-Pandemic Era

Since the beginning of this year, the global economic slowdown caused by the COVID-19 pandemic has impacted various industries to varying degrees, and the pharmaceutical industry is no exception. On one hand, the rapid surge in demand for anti-pandemic efforts in the first half of the year fueled a boom in the pharmaceutical capital market, leading to a flourishing number of biopharmaceutical initial public offerings (IPOs). On the other hand, while the pandemic led to declining revenues for most companies, many enterprises also seized new opportunities for development.

Top 20 Global Innovative Drug Companies See 10.2% Market Cap Growth in Q2

Recently, data analytics and consulting firm GlobalData released the market capitalization rankings and change data for the Top 20 Innovative Pharmaceutical Companies in the second quarter of 2020. Compared with the first quarter of this year, the total market capitalization of the top 20 global pharmaceutical companies increased by 10.2%, reaching approximately USD 2.8 trillion, marking a significant recovery from the 7.9% decline in total market capitalization recorded in the first quarter.

Image source: GlobalData

In terms of rankings, the top five remained consistent with the first quarter, with 10 companies on the list seeing their market capitalization grow by more than 10%.

Johnson & JohnsonMarket capitalization increased by 7.2% quarter-on-quarter in the second quarter, maintaining its top position. According to Johnson & Johnson’s Q2 2020 financial report: global revenue amounted to $18.336 billion, a year-on-year decline of 10.8%; net profit was $3.626 billion, a year-on-year decline of 35.3%. Notably, among all of Johnson & Johnson’s business segments, only its pharmaceutical division, Janssen, achieved a year-on-year growth of 2.1%, or 3.9% when excluding acquisitions and divestitures. In addition to cardiovascular/metabolic products, five key therapeutic areas—immunology, infectious diseases, neuroscience, and pulmonary arterial hypertension—were critical drivers sustaining the growth of Johnson & Johnson’s pharmaceutical business.

AbbVieMarket capitalization grew by more than $60 billion (a 53.8% increase) in the second quarter, rising to sixth place, primarily driven by the acquisition of Allergan, which expanded its product pipeline. Madeleine Roche, an analyst at GlobalData, stated, “The acquisition of Allergan has enabled AbbVie to diversify its portfolio and increase its market share in the immunology and neuroscience sectors.”

BayerandVertexMarket capitalization grew by more than 20% in the second quarter. Bayer’s stock price rose in the second quarter as it resolved a series of legal lawsuits inherited from its 2018 acquisition of Monsanto. Vertex’s market capitalization continued its upward trend in the second quarter, primarily due to its dominant position in the field of cystic fibrosis (CF) treatment.

Daiichi-SankyoandTakedaDaiichi Sankyo and Takeda are new entrants to the TOP20 list, with second-quarter market capitalization growth rates of 18.7% and 16.6%, respectively. Daiichi Sankyo’s market cap growth in the second quarter was driven by its potential oncology candidates and clinical trial collaborations. Takeda’s strong performance was attributed to sales growth of its rare disease drug Takhzyro (lanadelumab) and its anti-tumor drug Ninlaro (ixazomib).

Unlike the situation in China, the overseas epidemic intensified in the second quarter, and the performance of multinational pharmaceutical companies remained sluggish. However, due to the mandatory early resumption of work in the United States, most companies observed a recovery in performance starting in late June. The capital market reacts to expectations; valuations of various companies were repaired in Q2, stock prices rose, and have returned to pre-pandemic levels. Companies related to COVID-19 drugs/vaccines, such as Regeneron, AstraZeneca, and Eli Lilly, led the gains.

Domestic Pharmaceutical Industry: Revenue Growth Slows, Significant Recovery in Q2

According to the National Bureau of Statistics, the revenue growth rate of the pharmaceutical manufacturing industry was -8.90% in Q1 2020, and the total profit growth rate was -15.70%. Data showed a turning point starting in April, with an overall revenue growth rate of 2.10% and a profit growth rate of -2.3% for the first half of the year. The improvement in Q2 was very significant.

According to research reports from various securities firms, it is evident that the pharmaceutical sector as a whole outperformed the broader market in the first half of the year. Although the COVID-19 pandemic had a certain negative impact on the pharmaceutical industry, its effect was relatively modest compared to other sectors. Moreover, revenue growth turned positive in the second quarter (Q2), and net profit achieved substantial year-on-year growth. Quarter-on-quarter, performance in Q2 improved significantly, indicating a marked recovery in domestic healthcare service demand.

Which Subsectors Benefited During the Pandemic?

The impact of the pandemic on various subsectors of the pharmaceutical industry has varied; coupled with policy influences, some companies have experienced a decline in revenue, while others have seized new development opportunities.

Chemical pharmaceutical preparations were impacted by the pandemic, with a decline in patient visits leading to an overall drop in sales volume, while the volume-based procurement policy further compressed profit margins. In the traditional Chinese medicine (TCM) sector, policy pressure remained significant, resulting in marked performance divergence during the first half of the year. In the biologics sector, vaccine companies drove the growth in net profit attributable to shareholders after deducting non-recurring gains and losses for the biomedical segment in the first half. As vaccine manufacturers were less affected by the COVID-19 pandemic, batch release volumes for some vaccine enterprises increased substantially year-on-year in the first half, leading to a significant improvement in performance.

This year, only the medical device industry has seen a surge in performance. The rapid increase in demand brought about by the outbreak of the COVID-19 pandemic has led to an explosion in the performance of medical device companies. However, with the emergence of vaccines and the control of the epidemic, how long can this growth continue? In addition, the CXO (Contract Research Organization) industry, which has indirectly benefited from the global epidemic, has also accelerated its performance growth. Due to the prolonged high levels of overseas epidemics, a large number of overseas orders have been transferred to China, accelerating the growth of corporate performance.

In summary, no egg remains intact when the nest is overturned; the pharmaceutical industry did not benefit from the pandemic, but instead experienced an overall decline in performance. However, the impact of the pandemic on the pharmaceutical industry was far less severe than on other sectors. Although the industry’s performance declined overall in the first quarter, domestic pharmaceutical companies showed a clear recovery in the second quarter, and multinational pharmaceutical companies also began to recover in late June. The industry as a whole is expected to return to a normal growth trajectory in the second half of the year.

References

1.Top 20 global innovative pharmaceutical companies by MCap saw 10.2% rise in MCap in Q2 2020, says GlobalData

2. Official Websites of Each Company

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