Double digit MCap growth in 2019 for 14 of top 20 pharma companies: GlobalData

The pharma sector saw promising year-on-year (YoY) growth in 2019, compared to the previous year, with 16 of the top 20 companies by market capitalisation (MCap) recording positive MCap growth and 14 companies seeing a double-digit growth rate. Among the positive performances were Takeda Pharmaceutical and Daiichi Sankyo, which reported more than 100 per cent YoY growth in their market caps, informed GlobalData, a data and analytics company.

Madeleine Roche, an Associate Analyst of Business Fundamentals at GlobalData, commented, “Takeda’s significant growth is thanks mostly to its acquisition of Shire, which completed in January 2019. Takeda benefited from an expanded drug portfolio and the ability to list on both Japanese and US markets after the acquisition.”

Johnson & Johnson, F. Hoffmann-La Roche and Novartis were the top three pharma companies by MCap in 2019. Except for Daiichi Sankyo, all of the top 20 companies listed in 2019 were also in the top 20 in 2018.

Riche continued, “Daiichi Sankyo’s remarkable stock market performance was driven by a collaboration with AstraZeneca for the development and commercialisation of Daiichi Sankyo’s Conjugated Monoclonal Antibody, Enhertu, which is indicated for multiple HER2 expressing cancers. The partnership deal was completed on 28 March 2019. Additionally, the FDA’s approval of Turalio, Daiichi Sankyo’s small molecule kinase inhibitor for the treatment of Tenosynovial Giant Cell Tumour (TGCT), in August 2019, will have boosted its market performance.”

The top 20 pharma companies by MCap had an average operating margin of 27.4 per cent, while the top ten reported a higher average of 32.33 per cent. The average price to earnings (P/E) for the group was 35.9, with seven companies above the average signifying optimistic investor sentiment. With the exception of Biogen, all of the companies reported P/E in the double digits.

Roche added, “The earnings per share (EPS) average for the top twenty pharma companies by MCap in 2019 was $5.6, with three companies noted to be above average. Biogen recorded the highest EPS of $31.4 in the list and F. Hoffmann-La Roche ($15.7) and Amgen ($12.9) were the other two companies reporting above-average EPS. The average return on equity (RoE) of the group stood at 36.4 per cent with eight players above the average and 14 players recording double-digit RoE. The average return on assets (RoA) of the group stood at 11.1 per cent with eight players above the average, while nine players recorded double-digit RoA.

“The group continue to invest in research and development (R&D), with an overall R&D/sales average of 19.2 per cent, with Vertex Pharmaceuticals, Gilead Sciences and Eli Lilly and Co recording 42.1 per cent, 39.8 per cent and 25.1 per cent, respectively.

“Vertex’s significant investment in R&D in 2019 paid off with the approval of Trikafta in late 2019, a small molecule combination drug proven to treat a wide range of Cystic Fibrosis patients.”