Why Pfizer’s Covid-19 pill could be a game changer

TL;DR

• Pfizer’s Covid-19 pill could cut the risk of hospitalization or death amongst adults exposed to the virus by 89%
• The effective treatment is seen as a potential game-changer in the fight against Covid-19, leading to a surge in stocks exposed to re-opening.
• These airlines and hotels stocks could still present a long-term opportunity together with the recovery in global travel

What happened?

• The mighty Pfizer pill. Pfizer said that its Covid-19 pill, used in combination with a widely used HIV drug, cut the risk of hospitalization or death by 89% in high-risk adults who have been exposed to the virus. Apart from being highly effective, the pill is seen to be easy to administer as it can be taken by mouth. Pfizer plans to submit its data to the US Food and Drug Administration (FDA) before end of November 2021 and could be made available to American by the end of the year.
• Surge in Covid-19 recovery stocks. Optimism towards how the Pfizer pill could be a game changer towards the fight in the global Covid-19 pandemic led to a surge in stocks seen to be benefiting from the re-opening, including airlines, cruises and hospitality stocks. On the other hand, Covid-19 beneficiaries fell sharply, with Moderna (-17%) leading the decline amongst vaccine manufacturers.

What does this mean?

• Second antiviral pill to demonstrate strong effectiveness. The positive news follows Merck’s announcement earlier in October that it has developed a drug that reduces the risk of hospitalization or death by around 50% for patients with mild or moderate cases of Covid-19. Merck’s pill has already received approval by Britain’s medicine regulator, facilitating the treatment of Covid. 
• Continued re-opening likely. In the past few months, we have seen more confidence in re-opening even with rising virus cases as vaccinations appear to have broken the chain between infections and serious illness in the developed world. In Singapore, there is news of a new Vaccinated Travel Lane (VTL) almost every week. In the US, trans-atlantic routes between the US and 30 countries have officially opened. In Australia, Melbourne has exited the world’s longest lockdown after more than 70% of the eligible adult population was fully vaccinated. The effective treatment of Covid-19 with these medical advances is likely to drive further re-opening as the strain on the healthcare system in greatly reduced. 

What would Beansprout do?

• Re-opening plays could still present interesting opportunities. Despite the bounce in share price, stocks with exposure to re-opening like airlines and hotels could still present a long-term opportunity together with the recovery in global travel. Barring a new variant that is elusive to vaccinations and treatment, it would appear that there is truly light at the end of the tunnel in the Covid-19 pandemic.

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