Not so exclusive

STEALING the limelight from the glove boys in recent weeks are pharmaceutical companies, namely Pharmaniaga Bhd and Duopharma Biotech Bhd.

Both have seen their share prices soar – Duopharma’s stock even reached a record high – as a result of news that there is hope for a Covid-19 vaccine and these companies would be the ones involved in packaging and bringing it to the market in Malaysia.

Notably, earlier news reports, quoting Science, Technology and Innovation Minister Khairy Jamaluddin, did state that Pharmaniaga and Duopharma would be involved in the fill and finish processes for the Covid-19 vaccine, once it is ready.

So it is no wonder that the share prices of these companies sky-rocketed.

This week however, Khairy was reported as saying that the packaging for the vaccine would not be exclusively managed by these two firms.

As a result, the stocks fell.

RHB Investment Bank Research even downgraded its rating on Duopharma to “sell”, noting that its stock price had run more than 70% in the past month or so but its fundamentals had not changed.

This begs the question, was the rally of both stocks justified?

If the fill and finish processes will be opened to more companies, it is a given that there will be more competition and perhaps even if both companies undertake the business, margins may not be as attractive since there could be a handful of players vying for the same pie.

While it is still unclear at this stage who will be the beneficiaries, one thing is for sure – retail investors, traders specifically, will chase stocks, at the slightest hint of positive “news”.

Never mind that the news could change in the coming days or that the dust has not yet settled on the matter.

This is why many traders get their fingers burnt.

But it is also what makes the stock market an intriguing and exciting space.

Both companies’ share prices have since come off their highs, and it remains to be seen how their stocks will continue to react in the weeks to come.

In the meantime, the market waits for the next big thematic play.

What will it be?