What’s the value of the most important medicine since the invention of penicillin? For shareholders, it all depends.
If you had bought into the stock of Pfizer , which was the first of the big pharmaceutical companies to announce its Covid-19 vaccine’s effectiveness, the answer is not a lot. Pfizer shares were down this year even before being hit on Monday by the effectiveness of the rival vaccine from Moderna .
It gets worse. The pharmaceutical sector has lagged behind the rest of the market in the U.S. this year, not an obvious outcome at a time of pandemic-inspired drug discovery. Even the biotechnology sector, where Moderna sits, has underperformed the S&P 500, at least as measured by MSCI.
Warren Buffett is giving it a try, anyway. Berkshire Hathaway invested several billion dollars spread across Big Pharma and biotech names last quarter.
The broad explanation is that a vaccine is better for the rest of the world than it is for the maker of the vaccine. This showed up in the biggest winners from Pfizer or Moderna’s positive results on Monday and the week before: the cruise lines, airlines and oil companies, whose beaten-up shares jumped as much or more than Pfizer and Moderna on the prospect of a faster return to normal.