02. March 2021 | 11:15 CET
Q&M Dental, Pfizer, BioNTech, Teva: Watch out for these pharma picks!
The COVID pandemic has permanent surprises in store, which strongly influence our daily life. The province of Tyrol was sealed off entirely 2 weeks ago. The Czech Republic is being helped out with vaccine doses because the incidence figures are going through the roof. In Germany, hairdressers and DIY stores have been allowed to open again. Gradually, everyday life is returning to normal, but it will probably take some time before we regain the quality of life of the pre-Corona years. Let's take a closer look at various business models in the healthcare industry to get a feel for what's next.
time to read: 4 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Q&M Dental Group - Good numbers for 2020, business in full swing
Q&M Dental Group Ltd, a leading private dentistry group with 89 locations in Singapore, has fared well through the crisis so far. Although its treatment locations were limited in opening due to the pandemic, it did relatively well in 2020. The Company just reported SGD 137.6 million (+8%) revenue and a net profit of SGD 19.7 million, up 10% year-on-year. Q&M Dental Group's revenues consisted of dental and medical clinic treatments, sales of dental equipment and supplies, and Covid-19 test kits and laboratory tests.
Things are currently going well in the core business in Singapore and Malaysia despite the Covid-19 pandemic. The SGD 7.2 million increase in sales was mainly due to sales from June to December 2020 being significantly higher than in the earlier months of the fiscal year. Operating expenses decreased by 3% to SGD 101.4 million, mainly due to rental discounts given because of a Singapore government pandemic response grant program. As of December 31, 2020, the Group had cash and cash equivalents of SGD 48.8 million and bank borrowings of SGD 77.4 million.
The Singapore government recently announced a SGD 3.1 billion budget for Covid-19 testing, clinical management and contact tracing as part of an SGD 11 billion Covid-19 package in the 2021 budget. This budget will allow Q&M to double its PCR laboratory testing capacity again. The goal is to perform a significant proportion of the current 28,000 daily tests in Singapore. To maintain its current position as the leading private dental Company in Asia, Q&M aims to open at least 30 dental practices per year. It will also introduce AI-powered dental treatment plans in Singapore as part of various digital projects.
Q&M Dental Group is entirely up to speed with its service packages and counters the pandemic with active business ideas. Q&M shares currently cost SGD 0.58 in Singapore and have gained nearly 30% in February alone.
Pfizer Inc. - Here it goes downward!
The shares of Pfizer Inc. have been on a downward trend for a good 2 months. Shortly after the announcement of the approval of the Covid-19 vaccine, developed together with BioNTech, the stock price suffered. From a high of around EUR 35.50, it most recently went down to around EUR 28.00. What is going wrong here?
Pfizer and BioNTech have initially demanded more than EUR 50.00 from the EU for their vaccine. However, according to SPIEGEL information, the parties very quickly agreed on the current price of around EUR 16.00 per dose. It may be assumed that Pfizer's internal calculations were significantly higher and that they had rather imagined blockbuster potential from the distribution of the vaccine. Of course, for ethical reasons, the price cannot be approached, as the public would wreak a wave of anger on the "greedy pharmaceutical companies". So we are stuck with EUR 16.00, which will cost the EU alone around EUR 5.3 billion in 2021, not to mention the complicated logistics and high administration costs.
Pfizer's figures are anything but round at the moment. In the fourth quarter, Pfizer did achieve 12% year-on-year growth at USD 11.68 billion, but that fell short of estimates for USD 12.01 billion. Adjusted earnings of 42 cents per share grew 14% and missed forecasts of 51 cents by a wide margin. It looks like the market will have to find a real value for PFE stock first; we advise staying on the sidelines here for now.
BioNTech - How is Pfizer's partner doing?
In parallel with Pfizer's development, BioNTech also went down slightly. Nevertheless, the share is not far from its high of EUR 109. However, the market capitalization is still a high EUR 21.7 billion - still a proud value for a manageable product range. BioNTech was also able to fend off the immanent accusations that, as a manufacturer of life-saving vaccines, it is only allowed to make limited profits. For this reason, among others, BioNTech and CureVac have sought larger partners for development.
And in doing so, they have long since provided what their critics have been calling for. They are entering into cooperative ventures, including tech transfers, and are thus ramping up production in the numbers in favor of the fastest possible market supply. We all know that government intervention in the free economy rarely works, so we support free pricing based on supply and demand.
Whether this will lead to an increase in Pfizer and BioNTech share prices again in the medium term is questionable, as the hype surrounding the COVID fight already seems to be old news on the stock market. In this respect, BioNTech is likely to have already seen its high.
Teva Pharmaceutical Industries - When will the turnaround come?
Teva Pharmaceutical Industries Ltd. has to fight again with a negative outlook on the part of Fitch. The market has been bothered by relatively high debt levels for years, and the equity ratio has fallen continuously to below 20% in recent years. Revenues fell by a full 17% from 2014 to 2019, while operating profit lost more than 40%. Since 2017, the Company no longer generates a net profit; however, the losses halved recently.
Since Teva Pharma is still one of the world's largest generics manufacturers, we will almost certainly see sales increases with new products again in the coming years. In the meantime, the Teva share price can stabilize in the USD 9.00 to 12.00 range. If the line around 9.00 USD holds, a 5-year downtrend could slowly come to an end. It is time to put Teva on your watchlist!