Global listed firms that may develop a vaccine for Covid-19 have seen a sharp rally from their lows in CY20. Some players have risen in excess of 4,000 per cent. They include firms such as Vaxart and Novavax. Moderna is up over 433 per cent from its January lows.
The Indian pharmaceutical sector has also been going through a surge. The Nifty Pharma Index is up over 80 per cent from the March lows. The difference in valuations between Indian and global players has also changed. The price-to-earnings ratio has fallen for players on a median basis. It was around 21.1 in December 2019.
The current level is almost 15. The higher the ratio, the more expensive the firm is considered to be. The Nifty Pharma Index has had a different trajectory from global players. The P/E ratio was 25.5 in December 2019. It is now at 47.1. The valuation gap between the two has widened since the 2019-end and the beginning of the pandemic.
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