'There's room for more than one large-cap pharma winner'

There’s room for more than one large-cap pharma company success story as the race for a COVID-19 vaccine and anti-viral drugs continue.

As the world’s smartest scientists work around the clock to thwart a virus that is causing devastation around the world, many investors are playing vaccine bingo with the leading pharma companies, hoping to score big when one finally announces its eureka moment.

However, Charles Taerk, of Faircourt Asset Management, which is the portfolio advisor to the Ninepoint Alternative Health Fund, believes all the large-cap pharma firms are bringing their own expertise to combat a virus that, according to experts, is mutating. As a result, he expects multiple treatments to emerge.

He told WP: “It could be that seven or eight solutions are going to be important. There is room in the success pool for more than just one.”

The fund was ahead of the curve in owning the top firms. In the first part of his interview – the second will address the performance of the cannabis sector in the downturn - Taerk said that early in the three-year-old fund’s existence, Faircourt brought in some selectively-owned large, multi-billion dollar pharma names as a way to stabilize the portfolio against volatility in the cannabis industry.

The likes of Gilead, Johnson & Johnson, Pfizer, Merck and Abbott Labs have all been in the portfolio over this time in varying weights. In January, Taerk said he began to field questions from investors about its weighting because the coronavirus had started to take hold in China and people were looking at who the potential front-runners were.

The pharma sector is now a catalyst not just for the stock market but also for a reopening of the global economy. They might well be the most watched stocks in the world right now.

Taerk said: “Whether it’s restaurants, concerts or sporting events, public events are not going to happen in any great way until there's effective testing and antivirals.

“Those companies [we own] are the larger names but we’re not betting on one individual breakthrough necessarily. But by owning large-cap pharma, you own companies that have experience in bringing drugs to market, you have experience in their efficacy and their global operations so that they can do the clinical testing, do the work in a responsible fashion and get regulators on side as quickly as possible. I think the success of Remdesivir really speaks volumes to the type of company that we're owning.”

While their market performance will be a boon for the portfolio, Taerk also believes that the reputation of the sector is being restored after a number of years of being kicked around by regulators and consumers. He said: “If anything, the coronavirus pandemic has re-emphasized the strength and value of these companies. We are seeing reweighting for the sector, where investors are realizing new value in some of these names.”