Global listed companies which may help develop a vaccine for the Covid-19 pandemic have seen a sharp rally in 2020. Some of the players have risen in excess of 4000 per cent. This includes companies like Vaxart and Novavax. Moderna is up over 433 per cent from its January low.
Source: Bloomberg, Business Standard calculation
Note: Based on a sample of global listed vaccine players
The Indian pharmaceutical sector has also been going through a surge. The Nifty Pharma Index is up over 80 per cent from its March 2020 lows. The difference in valuations between Indian and global players has also changed.The price-to-earnings ratio, a measure of stock price in relation to the profits of the company, has fallen for the global players on a median basis. It was around 21.1 in December 2019. The current level is closer to 15. The higher the ratio, the more expensive the company is considered to be, relative to its earnings. The Nifty Pharma Index has had a different trajectory from the global vaccine players. The price/earnings ratio was 25.5 in December 2019. It is now at 47.1. The valuation gap between the two has only widened since the end of 2019, and the beginning of the pandemic.