After massive market cap growth for Eli Lilly and Novo Nordisk since the start of the decade, investor enthusiasm dimmed for the two most valuable companies in the industry in the third quarter.
From July through the end of September, Novo and Lilly experienced market cap losses of 18% and 2%, respectively, according to a report from GlobalData, which tracked the share performance of the industry’s 20 most valuable companies during the period. Additionally, over the first month of the fourth quarter and after Lilly reported surprisingly stagnant third-quarter sales for its diabetes and obesity drugs, its market cap has slipped by another 13%.
Oddly enough, the losses for Novo and Lilly came during a quarter of market cap growth for the industry overall, as the top 20 drugmakers combined for a 2% increase in aggregate market capitalization to $4.3 trillion, according to GlobalData. Fourteen companies enjoyed market cap increases, with eight making double-digit gains.
GlobalData credited those jumps to “increased investor optimism following interest rate cuts by the U.S. Federal Reserve in September.”
The big gainers in the third quarter were Bristol Myers Squibb (+25%), Gilead Sciences (+22%) and Sanofi (+19%). GlobalData analyst Alison Labya credited BMS’ surge to its “robust pipeline progress” and the FDA approval of schizophrenia drug Cobenfy.
Meanwhile, Gilead rode the approval of primary biliary cholangitis treatment Livdelzi and a key trial victory for PrEP HIV drug Sunlenca.
Sanofi’s market cap boost coincided with an FDA approval for first-line multiple myeloma drug Sarclisa and nods in Europe and the U.S. for anti-inflammatory juggernaut Dupixent to treat chronic obstructive pulmonary disease.
While sales of Dupixent continue to boom, Sanofi’s U.S. partner on the treatment, Regeneron, had a market cap gain of just 0.1% as eye disease drug Eylea continues to lose market share to Roche’s Vabysmo. Meanwhile, propelled in part by the strong performance of Vabysmo, Roche saw a 14% market cap gain.
Other companies to post double-digit market cap increases were AbbVie (+15%), Alnylam (+15%), Johnson & Johnson (+11%) and Takeda (+10%).
The boost for AbbVie came as investors gained confidence that sales of the company’s new immunology drugs Skyrizi and Rinvoq can compensate for the loss of revenue from Humira, which has lost patent protection. In the first three quarters of this year, sales for Skyrizi and Rinvoq came to a combined $12 billion.
Alnylam’s boost moved it into the top 20 ranks and came as RNA interference drug vutrisiran reduced all-cause mortality in a phase 3 trial for transthyretin amyloid cardiomyopathy (ATTR-CM).
Of the top 20, Novo and Lilly were among only six companies that witnessed declines in their market value in the third quarter. The others were Merck, which suffered an 8% decrease, Daiichi Sankyo, which saw shares slip 5%, and AstraZeneca and Vertex, which were down by less than 1%. Merck’s drop has come amid fading sales of HPV vaccine Gardasil.
Despite their drops, Lilly ($777 billion) and Novo ($499 billion) have by far the highest market caps in the industry. Following behind them are J&J ($386 billion) and AbbVie ($360 billion).
“The biopharmaceutical industry is poised for a recovery, fueled by multiple FDA approvals leading to a rebound in companies that have seen declines in market capitalization in previous quarters, such as Gilead and BMS,” Labya said in a statement. “Industry leaders are driving innovation by advancing their R&D pipelines and entering billion-dollar strategic alliances, which has been facilitated by interest rate cuts.”