Global Pharma Sector Growth during Pandemic and Stock Impacts5 min read

Global Pharma sector growth during pandemic and stock Impacts

Pharma Industry and Pandemic 

The pharma sector has been through ups and downs constantly tackling the shortages and lockdowns with all-time high demands to ramp up production to meet urgent requirements of the pandemic. Even after slow processing, global lockdowns, transportation problems and financial restrictions in the global recession, the pharma industry worldwide emerged as the saviour of the world with growth potential and expanding short and long-term horizons.

Global medicine spending is projected to increase at 2–5% annually and exceed $1.1 trillion in 2024.”

The demand side derivatives dramatically ramped up the difference between supply and demand as the hype for life-saving drugs, immunity drugs, nominal medications and even specific medications caused a havoc situation in markets due to serious concerns about economic lockdowns. This gap was not easier to fill up in a short of time with limited stocks of materials, border transportation restrictions, financial constraints.

The market chains were disrupted with supply and demand uneven behaviours and globally affected medical treatment. This also caused a logical loss of retail customers due to homebound consumers. Therefore the industry worldwide had to come up with more products with high strategical plannings.


What caused growth in the pharma sector amid constraints?

The first and foremost reason begins with pharmaceuticals being a part of the FMCG industry was constantly supported by governments all over the world and was allowed to operate on larger scales even at peak covid -19 tallies which nevertheless proved to be profitable for companies under pharma sector as rest economy at a halt, they were able to earn.

The next important factor was reviving retail sales but in the case of closed shops, the pharma sector had to innovate to a large extent in both B2B  and B2C cases. This problem was largely tackled by online platforms and E-commerce which boosted the sale even further from the retail level. Also, the collaboration of the global pharma sector with hi-tech AI services companies and allied sectors further gave a push to a smooth transition of the disturbed supply chain to a normalised process.

Analyzing the impacts, we cannot forget the role of high investments of government as well as private players in the medical sector who supported the research and development of companies to get good prospects out of it. Major companies expanded their production not only in main medicine but also started new ranges of immunity products or covid essentials which paved a way for short term financial profitability side by side long term growth prospects in the product range.

The global financial impact of pharma sector growth

“According to the IQVIA’s 2019 Global Use of Medicine 2019 report, the amount of money spent on buying medicines across the world will exceed $1.4 trillion by the end of 2021.”

The global pharmaceutical manufacturing market size was estimated at USD 405.52 billion in 2020 and is expected to reach USD 486.62 billion in 2021.

This is primarily because of the large investment size in short term due to covid-19 and innovation needed on an urgent basis. In 2020, the US federal government invested $11 billion in late-stage vaccine development and expansion of manufacturing capacity.

Undoubtedly, the revenue globally has increased for the pharma sector specifically due to high demand sensitivity and pandemic scenarios. The forces of preferences have also played a significant role in shaping the crucial covid-19 year for the medical industry. Consumers with no medical problems have also counted into potential customers due to high immunity needs and product supplements.

The positive impact of a wide consumer base and high demand for covid-19 drugs have lead to revenue derivatives of the pharma sector.

Pharma revenues worldwide totaled 1.25 trillion U.S dollars in 2019 and saw a significant hike of 20 billion U.S dollars in 2020 with a tally being 1.27 trillion U.S dollars. 

Stock markets and Pharma 

Institutional exposure of pharmaceuticals stocks was at a 40-month high, according to Motilal Oswal. The weightage of pharma stocks in the portfolio of fund houses has improved by 200 basis points to 8% in April 2020. And the sector was the biggest ‘overweight’ for domestic funds, replacing capital goods.”

Investors have been putting up more in FMCG sectors viewing the growth prospects as well as other economic constraints emerging due to pandemic. Backed up by the demand factors high demand generates high revenues and henceforth giving a better portfolio and valuation in capital markets.  

Not just that but image formation also plays a crucial role in implementing profitable deals with government support. This also counts in the noble cause they support during the pandemic. Though this sounds vague this might influence the investor decision greatly.

Stating some examples, during the COVID-19 pandemic, Bayer donated three million tablets of the antimalarial drug chloroquine and pharma pledged over $155 million to support COVID-19 relief funds. This included $50 million from Johnson & Johnson, $35 million from AbbVie, $20 million from Novartis, $10 million from GlaxoSmithKline, $10 million from the Biogen Foundation and $40 million in grants and cash from Pfizer, among others.

Top 5 pharma companies having the highest market cap evaluation 2020

    Company                     billion U.S dollars

  1. Johnson & Johnson –          382.02

2.Roche Holding AG –             319.12

3.Novartis AG –                     220.78

4.Merck & Co Inc-                 210.26

5.Pfizer Inc –                        200.16

Concluding the positive growth of the pharma sector, we highly saw a push being generated by the means of pandemic emergence and furthermore have paved a lead path for upcoming years. The innovation in financial, research, marketing and consumer reach patterns are the key clauses that will upsurge the pharma sector even more in near future and attract high investment behaviour.


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