Stockwatch: Investors Reward Rose-Tinted Guidance
But It Will Come Out In The Second-Quarter Wash
After three weeks of the first-quarter 2020 earnings season, the coronavirus pandemic has left pure-play pharmaceutical companies in a much better position than many other sectors. One of the reasons behind this has been channel stocking. As some companies have learnt in the past, this can be a double-edged sword.
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After only two weeks of the first-quarter 2020 earnings season for biopharmaceutical companies, the tempo of the announcements seems already to have been defined. Unless companies are exposed to, on the one hand, medical devices, or on the other, consumer health or diagnostics, the impact of the coronavirus pandemic on pure play biopharmaceutical companies has so far been marginal.
The pharma saw a $250m revenue increase due to inventory stockpiling and early prescription renewals, but its therapies outside cancer and diabetes may suffer in the coming quarters due to COVID-19.
Salix Pharmaceuticals lost 38.3% of its recently rising value – chopping more than $3bn from its market cap – after the stock market closed on 6 November following the immediate resignation of the company's chief financial officer and Salix's admission that an audit of its inventory levels is ongoing.