Healthcare and biotech stocks posted mixed performances during last week’s market rout amid the COVID-19 outbreak, while analysts said that investors should focus on companies with stable fundamentals once the outbreak subsides.
Stocks for mask makers rose steeply, with shares of KNH Enterprise Co Ltd (康那香) and Universal Inc (恆大) increasing 10.78 percent and 26.38 percent respectively this week, while shares of GeneReach Biotechnology Corp (瑞基海洋), a maker of in vitro diagnostic devices and reagents, moved up 28.55 percent.
Medical disinfectants supplier Panion & BF Biotech Inc (寶齡富錦) shares also increased 2.37 percent last week.
Even though makers of healthcare devices such as forehead thermometers TaiDoc Technology Corp (泰博科技) and Avita Corp (豪展醫療) fell 2.52 percent and 1.2 percent respectively, both fared better than the broader market indices.
Last week, the TAIEX on the main board declined 3.37 percent from the previous week and the Taipei Exchange on the over-the-counter board fell 3.96 percent in the week.
As new cases of COVID-19 emerge, healthcare experts have said that people should take additional precautions and maintain personal hygiene, which, with the continuing correction in the local equity market, poses a buying opportunity in individual stocks related to disease prevention, detection and personal protection, Yuanta Securities Investment Consulting Co (元大投顧) said in a note last week.
Favorable virus effects have yet to materialize in biotech stocks, although investors were often attracted by the potential for a research breakthrough. Biotech stocks suffered a 2.93 percent decline on average last week, stock exchange data showed.
“There are three major drug candidates under clinical trials for the treatment of COVID-19, namely favipiravir (an approved anti-flu drug), chloroquine phosphate (an approved antimalarial drug), and remdesivir (a proposed drug for treating Ebola),” Yuanta analyst Jane Jiang (蔣欣穎) said in the note.
“Based on previous experience, the time to market for a vaccine for an epidemic could be half a year, at least,” she said.
However, Adimmune Corp (國光生技) and Medigen Vaccine Biologics Corp (高端疫苗) saw weekly gains in shares, rising 6.68 percent and 17.78 percent respectively.
Adimmune is cooperating with the National Health Research Institutes and Medigen Vaccine is working with the US National Institutes of Health in developing a COVID-19 vaccine.
Both use recombinant protein technology, which should accelerate their vaccine development by one month, Jiang said.
Active pharmaceutical ingredients (APIs), the basic inputs for drugs, are among the goods, such as masks, facing a shortage, due to disruptions in the global pharmaceutical supply chain.
“China is a big supplier of APIs including antibiotics, analgesics and anti-HIV drugs, which may face a supply gap if the outbreak continues,” Jiang said.
Taiwanese API manufacturers, including Savior Lifetec Corp (展旺生技), Yung Zip Chemical Industrial Co Ltd (永日化學), Chunghwa Chemical Synthesis & Biotech Co Ltd (中化合成生技) and Formosa Laboratories Inc (台耀化學), might see an increase in API orders, she said.
Last week, Yung Zip stocks edged up 0.87 percent and Chunghwa Chemical’s rose 4.71 percent, but Savior Lifetec shares fell 6.28 percent and Formosa Laboratories’ declined 4.57 percent.
“Valuations for biotech firms should return to their fundamentals after the outbreak,” Jiang said.
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