Troubles for Bayer and AbbVie? Their market cap in Q1 tells a different story: report

These might seem to be difficult times for Bayer and AbbVie. Neither of the powerhouse companies developed a product to combat the coronavirus. And both have daunting concerns looming over their future prospects.

While Bayer faces pressure to divest and a mountain of litigation over its weedkiller Roundup, AbbVie is preparing for next year when its mega-monster immunology drug Humira loses U.S. market exclusivity.  

Amid those concerns, investors seem to have faith. In the first quarter of this year, Bayer’s market capitalization rose by 28.2% and AbbVie’s by 19.6%. Among the top 20 companies in the biopharma industry by market cap, Bayer and AbbVie posted the biggest share price gains during the first three months of the year, according to stats compiled by GlobalData.

In the aggregate in the first quarter, the industry’s market cap increased by 2.1%, with 14 of the top 20 pharma companies seeing their market cap rise. Other firms that made big gains were AstraZeneca (19%), Vertex (19%) and Teva (18%), GlobalData reports.

On the flip side, Moderna (-33%), BioNTech (-33%), Gilead (-18%) and Pfizer (-12%) posted the biggest declines.

The declines of Moderna and BioNTech can be “attributed to increasing concerns towards the sustainability of waning vaccine demand,” GlobalData analyst Mariam Shwea said in a statement.

“Similarly, Gilead Science’s and Pfizer’s ... decline is owed to decreased investor interest towards COVID-19 pandemic drugs as the focus turns towards addressing the growing burden of non-communicable disease," Shwea added.

Bayer’s growth came amid another quarter of investor activism targeting CEO Werner Baumann, who presided over the company’s disastrous acquisition of Monsanto. The $63 billion purchase brought with it the Roundup headache in 2018. Baumann also has rankled investors by resisting an industry trend to divest.

But the company’s revenue increased by 14% in the quarter, due largely to a big boost in sales from its crop sciences sector. And the company’s share price has been sparked by a promising pipeline and the launch of kidney disease drug Kerendia.

Meanwhile at AbbVie, its market cap grew despite a slowdown in sales. After 23% revenue growth in 2021, the Illinois-based company had a modest sales increase of 4% in the first quarter. But investors are becoming increasingly convinced that the company can back up its claim that its new immunology drugs Rinvoq and Skyrizi can pick up the slack when Humira—which generated sales of $20.8 billion last year—faces generic competition. GlobalData projects sales of the newcomers to reach a combined $20 billion by 2028.

Among the top three companies in market cap size, Johnson & Johnson, remained No. 1 at $466 billion, with a 3.5% increase in the first quarter. At $326 billion, Roche stayed at No. 2 despite a 7.8% dip in its value in Q1. Pfizer held the No. 3 slot with a value of $292 billion but is losing ground to AbbVie, whose market cap is now pegged at $286 billion.   

Also of note is the rise of Vertex, which saw a 19% increase in its market cap in Q1 as the company has enhanced its position in the cystic fibrosis market with newly approved Trikafta/Kaftrio, GlobalData points out.

Another market cap riser in the first quarter, which was not included in the GlobalData report, was Organon, which saw its value rise by 18%. In a recent report by Ernst & Young, analysts see the consumer health sector growing by 6% in the next few years "driven by a shift from reactive to preventative care and an overall focus on holistic health."