WuxiBio, Cadila Healthcare, Junshi to Strides Pharma, Macquarie highlights Global fight against Covid-19 pandemic

Companies from China, India and Korea are at the forefront of the fight against COVID-19 with antibodies, vaccines and production resources. Players late to the market face a saturated market and the end of the pandemic. There should be at least 2 years of strong demand for therapeutic options.

Quick fix or permanent solution:

Macquarie hosted six healthcare companies from China, India and Korea as well as an expert speaker to discuss the latest on Covid-19 therapeutic drugs, vaccines and their contract manufacturing operations. WuxiBio has benefited the most so far through a rapidly rising backlog of R&D and CMO contracts, providing visibility of strong earnings growth over the next two years. Cadila Healthcare generated COVID-19 revenue with four product lines: therapeutics, diagnostics, wellness and devices.

The other companies have either antibodies, vaccines or production capacity ready to launch in the next 3-6 months to capture COVID-19 demand. While the consensus is that we have to live with the pandemic for another year, none of the presenters were able to predict beyond 2021. Players who are late to the chase run the risk of launching when the market is saturated, resources are distributed, and the pandemic is almost over. All want the pandemic to end soon, but this may inversely correlate with research intensity. The smart companies took advantage of COVID-19 to improve efficiency of their research (Junshi) and manufacturing (Strides Pharma) and strengthen their reputation (WuxiBio) through good execution. 

Macquarie have seen excellent examples in China (East) and in Australia (West) bringing down the number of cases to a very low level. However, they have also witnessed in most other countries the difficulty in changing people’s behaviour, enforcing harsh measures and withstanding the economic downturn. Thus, contrary to the view of our expert speaker, Macquarie believe the virus will likely stay with us for many more years. For vaccines, the duration of protection will be an important issue. With more than 10 major vaccines under development, if vaccination is required every one to two years, this brings up the question of vaccine switchability and need of subsequent boosting.

Vaccines or (neutralizing) antibodies:

Covid-19 vaccines have attracted a lot of spotlight recently, to the extent that the future potential may be reduced for therapeutic drugs such as antibodies and antivirals. There is a need for both as vaccines take time and likely multiple shots to induce an immune response (not suitable for post-exposure prevention); there are logistical challenges and weaker responses among certain demographics. Macquarie believes there is at least 2 years of strong demand for treatments. Antivirals previously approved for other indications, now re-purposed for COVID-19, are quick fixes but may not be specific enough to kill the virus effectively. This is inline with Macquarie’s view about the mediocre efficacy of remdesivir (Veklury).

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Downside risks:

Macquarie believes most side effects, if any, should surface within days and weeks after vaccination or administration of antibodies. Long-term complications should be rare but fear and resistance are normal during global adoption of new technology or products not extensively tested yet.