The past week offered a number of surprising updates in terms of combating the pandemic that could possibly allow for a stronger grip over the situation. The news is considered a game changer by many market participants even though more time will be required to implement the changes. In this report we will be overviewing the latest announcements made some major pharmaceutical companies in the past days and the impact we could expect on various fronts. We will also be using share price movement’s to display the significance of the news, while our personal views will be blended simultaneously.

We make a start first with the recent announcements of Merck Inc. (#MRK) and Pfizer (#PFE) on their new pills that have demonstrated encouraging results thus far. In the initial stages of the pandemic, Merck had chosen to stay out of the vaccine game and focused on helping J&J (#JNJ) on its own production. This had led some investors to ignore and potentially doubt Merck’s capabilities to join the market and compete with the big names like Pfizer, Moderna and J&J. However, in a research our team performed back in May we found Merck was joining multiple projects attempting to develop medicines and vaccines to deal with the pandemic. We had also expected Merck to receive substantial attention with any announcement it was to make on medicines or vaccines. The news came several months later in September, when Merck and Ridgeback Biotherapeutics announced a phase 3 study evaluating Molnupiravir, an orally administered pill that inhibits the replication of multiple RNA viruses including SARS-CoV-2, the causative agent of COVID-19. Fast forward another couple of months or so, according to Merck’s official news Molnupiravir has proven to reduce the risk of hospitalization or death by approximately 50 Percent and has been so far authorized by the United Kingdom Medicines and Healthcare products Regulatory Agency (MHRA). Even though Merck and Ridgeback Biotherapeutics are still waiting for an Emergency Use Authorization (EUA) of their pill by the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), the results are amazing for a number of reasons. First and most important the pill has proven it can save lives which is a major optimistic driver for its use/distribution globally. Second, Molnupiravir tends to reduce hospitalizations which has been a major subject of worries by governments and authorities for the most part of the pandemic. This can significantly reduce economic costs for hospitals which are considered substantial, as they attempted to increase room space, beds, and ventilation systems to be able to support more people. In this case the pill can also help avoid overloading healthcare systems leaving room for the emergency cases to be treated properly instead of turning them away without help as was the case occasionally during the past two years. The news certainly motivated investors and the markets in general as the proposed results can support a wide range of matters currently concerning the global healthcare circumstances but also the economy and can speed up the process of economic recovery and trade globally. On the 4th of November Merck’s share price jumped to a 52 week high price ($94.10) possibly supported by the news. Yet the optimism does not stop here. On the next day after Merck’s announcement, Pfizer Inc. (#PFE) announced its own investigational novel COVID-19 oral antiviral candidate, PAXLOVID™, which was found to significantly reduced hospitalizations and death. The scheduled interim analysis of the PHASE 2/3 EPIC-HR STUDY showed an 89% reduction in risk of COVID-19-related hospitalizations and deaths from any cause. Considering both the pills mentioned, the supply for either is not even near the global demand at the moment yet production is forecasted to increase significantly as we enter 2022. According to Pfizer’s CEO Albert Bourlas, the company will apply as soon as possible to all the healthcare agencies and will provide all the necessary information to receive Emergency Use Authorization (EUA). The news sent Pfizer’s share price in a strong bullish interest opening with a considerable positive gap on Friday gaining 10.86% on the day. The news went viral in a few hours and managed to take the spotlight during the past Friday. Despite’s Pfizer’s success in the past years being the first pharmaceutical to receive approval for Use of Emergency by the FDA and being broadly selected as the number one vaccine with 95% efficacy, the company is making a comeback with a new product.

It is worth noting, Pfizer’s recent earnings report reflected an increase of 130% of operational growth in revenues. The question is how the company will perform with vaccines expected to remain in demand in the following years and with the COVID-19 oral antiviral candidate, PAXLOVID probably to be approved? What results will it produce then? Despite the outlook seeming rosy for Pfizer we would suggest that many pharmaceuticals will continue to compete for a piece of the pie and we would not be surprise to see companies that had not been part of the game so far entering the market unexpectedly just as Merck did.

Furthermore, the news on Friday had a negative impact on other pharmaceuticals like Moderna and Merck that were down substantially on the day. Moderna was also in the market’s epicenter in the previous week with different interesting information circulating the market. Moderna through its official website confirmed the FDA requires additional time to evaluate recent international analyses of the risk of myocarditis after vaccination. The impact of the aforementioned analysis seems uncertain for Moderna’s business for the time being yet the fact that more time is required for an investigation by the FDA is in our opinion worrying. Another report by Bloomberg in the previous week found Moderna having difficulties to produce the number of vaccines it had initially forecasted to. At the moment the estimation is for Moderna to produce 700 million to 800 million vaccine doses this year which is considerably lower than 800 million to 1 billion doses it claimed initially. Does the combination of the pre mentioned headlines imply that the good day’s for Moderna are behind it? Certainly not. Moderna has managed to produce a very successful vaccine with 95% efficacy that has been used by a significant part of the global population. Thus its ability to manufacture new medicines has been proven and tested. We would not be surprised if Moderna announces a medicine equivalent to Pfizer’s PAXLOVID or Merck’s Molnupiravir. Yet, Moderna may need to make a move fast as its major rival Pfizer has just announced a pill that reduces death rate and hospitalization for people infected by 89%.

Nevertheless, specialists insist that even with the pill’s being manufactured and distributed covering demand globally, the main tool used to fight the virus remains the vaccine. In our opinion, vaccination will remain in place for the next years and possibly even the decade. Covid-19 jabs are already thought to be combined with other vaccines used like the flu, thus protecting effectively on both fronts. We could expect pharmaceutical companies to combine more vaccines and provide protection for all with a single jab. Finally, we expect companies like the pre mentioned to remain dominant forces towards shutting down the pandemic and restoring health and safety. The companies have the infrastructure to remain in power as they can produce different medicines and vaccines that are expected to generate more revenues in the coming years as demand is uplifted. Thus the financial position of these companies can be enhanced according to what we have seen so far. Yet the competition between them and the addition of new rival pharmaceutical companies remains remarkable from our point of view as it can push for further technological advances in medicine that can help humanity in the future.