04 May 2020
Posted in Business Fundamentals
Pharma companies shine in gloomy APAC business environment during Q1 2020, says GlobalData
The COVID-19 outbreak is having a major impact on business enterprises worldwide, as they grapple with weak demand and brace up for recession. Against the backdrop, the total market capitalization (M Cap) of the top 50 companies in the Asia-Pacific (APAC) region witnessed a substantial decline during the first quarter (Q1) ended 31 March 2020. However, pharmaceutical companies were able to buck the trend, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Company Profiles Database reveals that in Q1 2020, the composite M Cap of the top 50 companies in APAC witnessed a substantial quarter-on-quarter (QoQ) decline of 11.4% from US$6.6 trillion to US$5.8 trillion.
The financial services and technology sectors, which accounted for 30 of the top 50 companies in the region, reported 15.7% and 1.3% decline in M Cap of US$1.9 trillion and US$1.8 trillion, respectively.
On the other hand, the pharmaceutical sector registered 16.6% growth as the companies in the sector were busy in meeting the growing demand from healthcare services providers. Companies specifically dealing with pharmaceuticals realized a QoQ growth of 21% from US$179bn to US$216.6bn, whereas biopharmaceutical companies reported 7.6% QoQ growth from US$87bn to US$93.7bn.
In the financial services sector, banks suffered the biggest setback as they slipped from a M Cap of US$1.7 trillion to US$1.4 trillion, followed by companies offering insurance services, which registered 18.2% QoQ decline. However, banks have been advised by the financial regulators to make use of their surplus capital and encourage digital banking to combat the situation.
Within the technology sector, the IT services and the semiconductors reported decline of 15.5% and 16.2%, respectively, whereas factors such as self-isolation and social distancing to curb the spread of the COVID-19 resulted in a 0.8% spike in the M Cap of Internet services industry across APAC to reach US$463.6bn.
Anindya Biswas, Company Profiles Analyst at GlobalData, comments: “The general economic downturn across the world is reflected in the APAC region as well. The spread of the pandemic coupled with uncertainty around economic recovery has affected the way industries work, as they face daily challenges to stay afloat in tough business conditions.”
Labor intensive sectors and services-based sectors such as the consumer services, oil and gas, and mining, which accounted for 20% of the top 50 companies in the list, took a hit as well, as their M Cap wiped off by 8.3%, 24.7% and 25.9%, respectively.
Other sectors such as power, retailing and auto, reflected a similar downturn of 5.9%, 8% and 15.7%, respectively, in their QoQ M Cap.
Biswas concludes: “The panic associated with the rapid increase in the number of patients with the COVID-19 symptoms lead to a rise in the spending in healthcare solutions to fight the disease. Q2 M Cap is likely to be driven by how quickly China recovers from the pandemic, apart from how other countries rein in on the outbreak and emerge out from the ongoing lockdown measures.”