Stock Watch

The evolution of new drugs to treat diabetes has enabled some diabetes franchises to shrug off biosimilar competition to insulins. But is some of the growth of therapies for diabetes and obesity a result of the pandemic?

Some entrepreneurs combine talent and experience to produce multiple profitable exits for investors. But there are many who do not, and past success is indeed no guarantee of future performance.

In a third-quarter earnings report that was difficult to fault AstraZeneca left big pharma earnings season on a high note. But raised full-year guidance depends on Evusheld sales and maybe China.

While big tech is suffering from a return to normality after the pandemic, big pharma always had a recovery in its base business to return to. But after the third-quarter earnings season, it seems both base and pandemic pharmaceutical businesses are still co-existing for now.

Merck grew sales, increased financial guidance and beat analysts’ expectations, noting a base business recovery from the pandemic. Pfizer increased guidance and beat expectations for different reasons.

Novartis’s use of the phrase “incident population” should have sent shock waves through companies developing gene and cellular therapies. Instead, like the stock price reaction to its lower revenues, the response was demure.

The pharmaceutical sector has historically provided generalist fund managers with a defensive tilt to offset their more cyclical exposures. But the opening announcements of third-quarter earnings season may show this counterbalance is under threat.

Generic pharmaceutical margins are notoriously thin while pricing is limited by intense competition. What happens to margins when raw material and energy pressures rise?

When the sector worries about regulation it is usually about drug development and registration. But governments also regulate on monopolistic positions in life sciences. Adding to that, national security enforcement is now rising.

Biotech CEOs often express surprise when the FDA rejects their drugs. But collaborative interactions between regulators and drug sponsors count for little if the latter fail to adjust their clinical and regulatory efforts accordingly.

The era of follow-on medicinal chemistry has largely been eliminated by more comprehensive patent protection. Nowadays, investors trade on the differences in safety and efficacy for similar molecules.

A drastic risk-off pullback in the public market can close an IPO window while private biotechs aspiring for either a public debut or an acquisition by big pharma may be stymied by their stale valuations.