For a long period of time, here and there in the media, they declare sharp rises in the share price of pharmaceutical companies, especially if it concerns those firms that are engaged in the development of vaccines. This is an absolutely natural process, because there is a huge demand for drugs of this kind, in connection with the rather destructive power of the coronacrisis, which is feared by both states and private enterprises, but not everything is so clear. What is happening with the securities of pharmaceutical companies today, as well as what we can expect in the future, we analyze in this material.
Why would an investor need this?
The production of a vaccine is a rather scientific and time-consuming process that requires serious financial investments, so not every pharmaceutical company can afford such a development, but nevertheless, today we already have several dozen different vaccines from certain manufacturers.
It is natural that between them there was competition for a place under the sun, especially when you consider that it shines quite brightly, because the state programs of many countries involve large-scale purchases of such drugs. But what does the investor care about these squabbles?
The answer is very simple - almost all pharmaceutical firms (if we are talking about private, not state-owned companies) have been on the stock exchange for quite some time and are issuers of securities.
Given all of the above, as well as the rather high volatility of this sector in this period, we can easily admit that this is an excellent chance for the investor to conclude a couple of profitable deals.
What primarily affects the value of securities?
So, after reading the last section, you could be convinced that this topic may be interesting for you, but what is worth knowing about these "pharmacy giants"? First of all, it should be borne in mind that strong volatility is both an advantage of this sphere and its disadvantage. You are unlikely to be able to play in a bullish style for the long term, because the shares of many pharmaceutical companies, although often soar, then stabilize quite quickly and reach either the previous level or a little more expensive. In addition, falls in the value of securities can also occur, which is even more strongly contrary to this strategy.
But why has this market become sharply volatile, because pharma has always been considered a stable bull stall. It's all about vaccines, or rather in its large-scale purchases. The fact is that the share prices of companies directly depend on the approval of a particular vaccine by the states and any news about the approval or not of a drug, for example, in the European Union, entails a sharp change in dynamics. In addition, this is quite seriously influenced by the public statements of statesmen, especially when it comes to the first persons or ministers of health of different countries.
In addition, the volatility of these securities is influenced by a somewhat skeptical attitude towards fairly quickly developed vaccines and any information about unsuccessful vaccination experiences, especially if it has received quite serious publicity can collapse the price.