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Have healthcare stocks been under the weather in 2023?

An employee walks past a door bearing the logo of Novo Nordisk at the factory in Hilleroed on September 26, 2023. Novo Nordisk is a leading global healthcare company, founded
An employee walks past a door bearing the logo of Novo Nordisk at the factory in Hilleroed on September 26, 2023. Novo Nordisk is a leading global healthcare company, founded Copyright AFP
Copyright AFP
By Indrabati Lahiri
Published on
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Euronews Business looks at how major healthcare stocks such as Pfizer and Moderna performed this year

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Healthcare stocks have lagged quite a bit this year, as pandemic and vaccination profits start to taper off. While medical device makers may have got a gloomier deal, weight-loss drug manufacturers did considerably better.

Consistent monetary policy tightening by the US Federal Reserve (Fed) has been pressurising the healthcare sector. Continued resilience in the US economy has also dampened demand somewhat, especially since healthcare stocks are seen more as a defensive, or hedging sector, with more or less constant demand.

Novo Nordisk

At the time of writing, Novo Nordisk surged 47.1% this year, to €93.3, following the massive success of its weight-loss and diabetes drugs such as Wegovy and Ozempic. This also allowed the company to become the biggest company in Europe at the moment, ahead of luxury goods giant LVMH, in the latter half of 2023.

The company has been praised for remaining conservative with its guidance and has pulled it up three times already this year, only after results started coming in. It made about $12 billion (€10.9 billion) in revenue from Ozempic and Wegovy alone, and has been credited with turning around the weight-loss drug market.

Johnson & Johnson

Johnson & Johnson (J&J) dipped 12.10% over the year to $154 (€140), primarily due to the talcum powder lawsuits, following several people alleging that they were diagnosed with ovarian cancer after using Johnson Baby Powder.

The company has also had to lower its guidance earlier this year, before being able to pull it up again in the latter half. J&J has also announced that it was restructuring its orthopedics branch, over the next two years, following medical devices sales and earnings falling below expectations. However, investors are worried as to how J&J will still be able to meet profit guidelines following this restructuring.

Pfizer

Pfizer plummeted 46.3% to €25, with the company, like several other rivals also suffering from a sharp drop in COVID vaccination demand. Furthermore, the recent acquisition of Seattle biotech company Seagen does not seem to have gone down overly well with investors.

However, Pfizer could actually be playing the long game to set itself up for success, according to Citigroup. The bank highlighted that the pharmaceutical giant may indeed be deliberately issuing lower guidances for now, so that it can potentially beat earnings in 202. Due to this, Citigroup has put Pfizer on the '90-day catalyst watch', betting that sometime in the next 90 days, Pfizer will readjust its guidance upwards.

AstraZeneca

AstraZeneca dropped 4.4% to €120 this year, despite strong quarterly earnings beating market expectations. Share prices dropped mainly following rumours of CEO Pascal Soriot considering leaving the company. Although AstraZeneca was swift in trying to quell these rumours, it was not entirely successful in reassuring investors.

The retirement of head of research Mene Pangalos, amidst these rumours also spooked investors further. AstraZeneca also came under increased fire earlier this year for its vaccines having a rare but deadly side effect of causing blood clots on the brain. This has already led to the deaths of over a dozen people in the UK alone.

Eli Lilly

Eli Lilly, the world’s largest pharmaceutical company, soared 50% to €517, following three of the five big drug launches it was expecting this year having been approved, and one more being pending. These are Tirzepatide, Mirikizumab and Pirtobrutinib, while Donanemab is pending approval and Lebrikizumab has been rejected.

This has led to the company upping its guidance for 2023 to between $33.4 billion and $33.9 billion (€30.2 billion to €30.7 billion). The company also has plans to take over POINT Biopharma, as well as research new weight-loss drugs jointly with Fauna Bio.

GlaxoSmithKline

GlaxoSmithKline (GSK) inched up 1.18% this year to €16.8, however, investors did not seem to have much confidence in the company’s growth for the next few months. This was following GSK Nigeria shutting its doors back in August, due to increased competition from Chinese and Indian imports.

The company is also planning to heavily slash its African operations in favour of a distributor-led model, which would impact about 29 African markets. Earlier this year, GSK also came under fire for keeping quiet about the potential cancer risks its heartburn medication Zantac posed, for over 40 years.

GSL employees are at work at the factory of British pharmaceutical company GlaxoSmithKline (GSK) in Wavre on February 8, 2021 where the Covid-19 CureVac vaccine will be produc
GSL employees are at work at the factory of British pharmaceutical company GlaxoSmithKline (GSK) in Wavre on February 8, 2021 where the Covid-19 CureVac vaccine will be producAFP

Moderna

Moderna crashed 48% to $94 (€85.18) this year, following the company suffering a major hit due to COVID vaccine shot demand declining, also leading to a large number of unused shots having to be written off. The company also had to reduce its guidance and outlook for the next year.

Moderna has also been attempting to change its manufacturing footprint over the last few months, which have mostly been focused towards resizing the company, as demand declines. This includes renegotiating or ending contracts with several third-party suppliers as well as reducing raw material purchases. The company has also faced significant non-cash charges, pertaining to tax allowances, further eroding profit margins.

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