17 Jun 2020
Posted in Pharma
Fourteen of top 20 pharmaceutical companies by MCap see double-digit MCap growth in 2019, says 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 capitalization (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% YoY growth in their market caps, says GlobalData, a leading 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 pharmaceutical 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 commercialization 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 treatment of Tenosynovial Giant Cell Tumour (TGCT), in August 2019, will have boosted its market performance.”
The top 20 pharmaceutical companies by MCap had an average operating margin of 27.4%, while the top ten reported a higher average of 32.33%. 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 pharmaceutical companies by MCap in 2019 was US$5.6, with three companies noted to be above average. Biogen recorded the highest EPS of US$31.4 in the list and F. Hoffmann-La Roche (US$15.7) and Amgen (US$12.9) were the other two companies reporting above average EPS. Average return on equity (RoE) of the group stood at 36.4% with eight players above the average and 14 players recording double digit RoE. Average return on assets (RoA) of the group stood at 11.1% 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%, with Vertex Pharmaceuticals, Gilead Sciences and Eli Lilly and Co recording 42.1%, 39.8% and 25.1%, 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.”