I wish to give my views about investing in pharmaceutical stocks that are involved in manufacturing vaccines and treatment for covid-19.

I present the financial figures of the stocks below:

Here are my comments about the financials:

a) Sinopharm has the lowest prospective PE ratio of 7.96 (earning yield of 12.5%) but the prospective profit is expected to drop by 24%. It has the smallest market capitalization.

b) Moderna suffered a drop of 52% in the stock price from its recent high. It prospective PE ratio is 11.89 (earning yield of 8.4%).  It appears that the stock price had moved up too much and has now corrected.

c) Merck has announced a new oral drug (Molnupiravir) for the treatment of covid. It has a 52% efficacy rate. The stock has a high prospective PE ratio of 13.09 (earning yield of 7.6%). 

d) Pfizer has announced a new drug (Paxlovid) for treating covid. It has an efficacy rate of 89%. The stock has a prospective PE ratio of 11.19 (earning yield of 8.9%). 

e) Gilead Science is the manufacturer of the remdesivir drug that was used for treating covid. The stock has a prospective PE ratio of 9.73 (earning yield of 10.2%). 

Future for vaccine
I believe that the manufacturers of the vaccine will continue to have good orders for a few more years. There are still many people in the lower income countries who are not vaccinated yet. The people in the higher income countries will need to have boosters.

The prospects should be good for Moderna, Pfizer and Sinopharm. Their prospective PE ratio is around 11 times, which is at a modest level.

Treatment of covid

Merck and Pfizer should see good revenue growth and earnings for their new drugs for treating covid, i.e. molnupiravir (Merck) and paxlovid (Pfizer). 

TKL's preference
My preference is Pfizer as it produces the vaccine and the treatment drug. I now hold the stocks of Sinopharm and Pfizer.

Note - This are my personal view. I am not giving financial advice.

Tan Kin Lian