struggled during lockdown as routine procedures and treatments were postponed. But a reopening economy should restore business as usual and repair depressed valuations.has seen its stock rocket 868% since January 2020. Yet some of the sector’s biggest names suffered as people shunned hospitals and mingled less, reducing new diagnoses and the transmission of diseases like flu.
Yet the sharp share price falls probably overstate the damage. Sanofi, which saw an 8% slump in its general medicines business sales last year, was helped by booming demand for its eczema treatment Dupixent. The French group’s overall revenue was flat in 2020. Novartis’s and GSK’s turnover even rose by 2.5% and 1% respectively.
GSK, Sanofi and Novartis are on average trading at just 13 times forward earnings, compared with 15 times at the end of 2019, according to Refinitiv data. If those three companies were valued on their pre-pandemic forward multiples, their combined $423 billion market capitalisation would rise by nearly $71 billion or 17%, according to Breakingviews calculations. As lockdowns end, such a recovery may come quickly.