Whatâs Going On Here?Roche, the worldâs second-biggest pharmaceutical company, released a first-quarter update on Wednesday that suggested itâs â very gradually â getting the upper hand on coronavirus. What Does This Mean?Rocheâs sales were 7% higher than the same time last year, and it mostly had its diagnostics business to thank: demand for its COVID-19 testing kits helped bump up the segmentâs revenue by almost 30%. And that was without sales from the firmâs new coronavirus antibody test, which will show whether someoneâs already beaten the virus. Thatâll launch in May, and itâs likely to give this quarterâs earnings another shot in the arm. Why Should I Care?For markets: Oh my Roche.
Rocheâs update seemed well-received: the Swiss giantâs stock rose 2%. Investors have been buying up pharma companiesâ stocks in their droves, apparently in response to the reported progress of various coronavirus treatment programs. And theyâve been showing biotech stocks some love too. That may partly be because of the companies' own successful efforts against the virus, but also because a bigger pharma firm is more likely to acquire them to get early access to effective drugs. Case in point: Pfizer-partnered BioNTechâs stock shot up on Wednesday after it won approval to begin clinical trials of its coronavirus vaccine in Germany.
The bigger picture: Long walk to freedom.
While Roche has gone down the antibody testing route, European rivals Novartis and AstraZeneca are instead looking into how existing drugs can be used to treat coronavirus. Sanofi and GlaxoSmithKline, meanwhile, are focused on developing new vaccines. But donât get too excited: Roche cautioned on Wednesday that between development, testing, and production, a vaccineâs unlikely before the end of 2021 (tweet this). At that point, investors may want to start thinking about how much the successful companies might actually earn from their treatments â especially given the pressures on typical price structures and the higher costs associated with breakneck production speeds. | 