With a controversial November election on the horizon – which could have huge implications for the economy, and especially the healthcare sector – it’s easy for investors to see the risks everywhere they look. In times of uncertainty, I often refer to a quote from Jeff Bezos that helps put things in perspective. The Amazon the founder once said:
Very often I get the question: “What will change in the next 10 years?” And this is a very interesting question; it’s very common. I hardly ever get the question, “What won’t change in the next 10 years?” And let me introduce you that second question is actually the more important of the two …
As the coronavirus pandemic continues to rage around the world, taking a serious toll in the United States and elsewhere, big changes could be on the way to health care. Depending on the composition of the Supreme Court and who is elected in November, a wide range of possible policies is conceivable. But some things are unlikely to change regardless of how they develop, not the least of which is the need to treat, test, and manufacture a vaccine for COVID-1
1. Regeneron is developing treatments for COVID-19
Regeneron‘S (NASDAQ: REGN) Monoclonal antibody therapy attracted global attention when President Trump received the experimental treatment after testing positive for COVID-19. The results appeared to confirm initial success in clinical trials. The antibody cocktail, based on previous Ebola treatment, was most effective in patients who did not activate an effective immune response to COVID-19 on their own. The company has used these monoclonal antibodies to develop treatments for skin and lung cancers and has its sights set on other diseases in the future, including prostate and ovarian cancer.
Operation Warp Speed - the public-private partnership that injected billions of dollars and a huge commitment to vaccine development and manufacturing – has accelerated a process that could take a decade in the span of just one year. Given the greater focus of the effort on vaccine development, only one therapy received investment and the amount was less than 5% of that spent on vaccines. That one investment went to Regeneron. Even before the 2020 pandemic, Regeneron was a stellar growing company, having expanded its sales by more than 1,700%, to nearly $ 8 billion, during the 2010s. With a profitable line of existing drugs, a likely endorsement of the its COVID-19 treatment and what appears to be further validation of its experimental treatments, the company is poised for another stellar decade.
REGN revenue estimates for current fiscal year data from YCharts
2. Test Diagnostics for Infections and Antibodies
Quest Diagnostics (NYSE: DGX) it doesn’t get much attention from investors regarding the coronavirus, but maybe it should. The company has an extensive network of thousands of laboratories and patient care centers, its own car and aircraft logistics network, and the capacity to perform approximately 150 million tests per year. It is precisely this end-to-end network that has enabled management to allocate resources to support the country’s overwhelming testing needs during the pandemic.
At the end of September, management says Quest has conducted nearly 16 million cumulative diagnostic tests for COVID-19 and increased test capacity to 400,000 per day, with an average result delivery of two days. Testing will become increasingly critical in the United States as the weather cools and people spend more time indoors. Additionally, management recently announced a 3-in-1 test that detects not only COVID-19 but also influenza A and B, to facilitate patient diagnosis and treatment.
As American life begins to return to some sort of normalcy, Quest will play a pivotal role. The company has announced partnerships with various college football conferences and the NBA, and is also associated with Clear, the biometric identity program that allows so many frequent flyers to avoid long airport security lines. Despite a few hitches – the NBA switched test partners from Quest as the Florida test volume delayed results for their players – all of that momentum has found its way into analyst revenue estimates for the coming year. The trend is likely to continue – the company has beaten analysts’ estimates in nine of the past 11 quarters, and management recently upped the guidance for the full year.
DGX revenue estimates for current fiscal year data from YCharts
3. Emergent Biosolutions is making progress towards a vaccine on almost all fronts
Lost in the headlines about who will be first to market a COVID-19 vaccine are the details of how those vaccine candidates are developed and manufactured. Emerging biosolutions (NYSE: EBS) is at the heart of this effort. The company is currently partnering with Johnson & Johnson, AstraZeneca, Novavax, is Vaxart on vaccine candidates.
Between support from its drug-producing partners and a grant from Operation Warp Speed, the company is expected to earn nearly $ 1 billion for helping create vaccines through 2021. As you can see, estimates for 2021 tax revenue have increased. constantly as the company continues to do so. acquire partners. Don’t be surprised if this trend continues as the company’s position on the critical path of vaccine development receives more attention.
EBS revenue estimates for current fiscal year data from YCharts