Whatās Going On Here?Roche, the worldās second-biggest pharmaceutical company, released a first-quarter update on Wednesday that suggested itās ā very gradually ā getting the upper hand on coronavirus. What Does This Mean?Rocheās 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 segmentās revenue by almost 30%. And that was without sales from the firmās new coronavirus antibody test, which will show whether someoneās already beaten the virus. Thatāll launch in May, and itās likely to give this quarterās earnings another shot in the arm. Why Should I Care?For markets: Oh my Roche.
Rocheās update seemed well-received: the Swiss giantās stock rose 2%. Investors have been buying up pharma companiesā stocks in their droves, apparently in response to the reported progress of various coronavirus treatment programs. And theyāve 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 BioNTechās 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 donāt get too excited: Roche cautioned on Wednesday that between development, testing, and production, a vaccineās 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 ā especially given the pressures on typical price structures and the higher costs associated with breakneck production speeds. | 