The onset of COVID-19 has seen ASX biomedical shares become involved in combatting the pandemic. Some companies are focused on treatments and equipment and others on the generation of a vaccine.
This has translated to strong share price appreciation in some ASX biomedical shares, but not all have been treated equally. The global pandemic has actually been a hindrance for some, such as those that rely on the availability of surgical beds in hospitals.
The healthcare sector was one of the strongest performing sectors in the share market in 2019. The onset of a global pandemic in 2020 means we’re more reliant on the industry than ever. While some sectors of the ASX have been smashed by the COVID pandemic in 2020, it is fair to say that others have flourished.
We take a look at how 7 top ASX biomedical shares have navigated 2020.
|Company||1-year share price return||Share price||Market Cap|
|Polynovo Ltd (ASX: PNV)||99.5%||$3.84||$2.58 billion|
|Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)||46.4%||$31.21||$17.8 billion|
|Resmed (ASX: RMD)||24.9%||$28.07||$10.26 billion|
|Nanosonics Ltd (ASX: NAN)||21.6%||$7.73||$2.36 billion|
|Mesoblast Limited (ASX: MSB)||8.17%||$2.19||$1.35 billion|
|CSL Limited (ASX: CSL)||3.65%||$288.81||$130 billion|
|Cochlear Limited (ASX: COH)||-17.6%||$191.36||$12.7 billion|
Polynovo has seen its share price more than double in 2020 as use of its Novosorb technology expands. The technology is used by surgeons to treat wounds such as burns but also has applications across the hernia and breast markets. The Novosorb product helps to regenerate the underlying structure of the skin, and is the only synthetic product in this space. Revenue from the product grew from $9.3 million in FY19 to $19.06 million in FY20 even with the impact of COVID restrictions.
Approved for use in the US and Australia, Novosorb achieved CE Mark approval in December 2019 allowing the product to be sold in Europe, the UK, and Ireland. Sales in the region have been strong and building every month. The product has been used in Canada under an exemption approval scheme and Polynovo is actively working on Canadian regulatory approval. While Polynovo is not in the COVID space, its technology is providing good results for patients. This should underpin further growth in sales in the years ahead.
2. Fisher & Paykel
Fisher & Paykel Healthcare has been actively involved in the fight against COVID with its share price increasing nearly 50% in 2020 as a result.
The company manufactures products and systems used in respiratory care, acute care, and the treatment of obstructive sleep apnea. Fisher & Paykel upgraded its earnings guidance early in the pandemic as demand for its respiratory humidifiers and consumables increased. Both are used directly in treating COVID patients.
This drove a strong result in the half year to September 2021, with net profit after tax up 86% to $225.5 million.
Also operating in the medical equipment space, Resmed has gained significant ground in 2020 thanks to the company’s business providing ventilators, masks, and circuits to countries fighting COVID-19. This demand has led to solid performance, with revenue up 10% to $751.9 million in the first quarter of FY21.
Resmed has also seen sequential improvements in patient volume in core markets of sleep apnea, chronic obstructive pulmonary disease and asthma.
Another ASX biomedical share involved in the COVID fight is Mesoblast. The share price was savaged in December when it was revealed a trial of its COVID-19 treatment was unlikely to meet its primary goal.
The biomedical company’s Remestemcel-L treatment was being trialled on COVID-19 patients with acute respiratory distress syndrome. The treatment was granted fast track designation by the FDA, but Mesoblast announced in December that the trial was unlikely to meet the 30-day mortality reduction endpoint.
Unfortunately for Mesoblast, the COVID trial failure comes on top of a trial failure of its heart treatment. A Phase 3 trial of Mesoblast’s treatment for advanced heart failure found the treatment did not reduce heart failure events. This saw the share price plunge 15% with the company losing around $400 million in market capitalisation. Mesoblast lost another $600 million in market cap following the disappointing COVID results.
The Nanosonics’ share price has now been a strong performer for the better part of a decade. This ASX biomedical share is a developer of infection prevention technologies.
Best known for its ultrasound probe disinfection system, Nanosonics sells both the unit that does the disinfection and the consumables used in the process. Nanosonics missed market expectations for FY20 but the share price recovered quickly. Installed units increased by 13% for the financial year and it is estimated that the company has only penetrated 20% of the global addressable market.
6. CSL Limited
The behemoth of the biomedical shares, CSL, has seen only modest share price appreciation in 2020 despite involvement in producing a vaccine for COVID.
Manufacturing of the Oxford/AstraZeneca vaccine commenced at its facility in Broadmeadows in November. CSL has separate contracts with AstraZeneca and the Australian Government to manufacture approximately 30 million doses of the vaccine, pending regulatory approval.
But the share price took a dive in December on news the University of Queensland vaccine, which CSL was to manufacture, will not proceed due to potential impacts on HIV tests.
Cochlear has had a tougher year than many ASX biomedical shares. Elective surgeries to implant the company’’s hearing devices have been delayed as a result of COVID, dampening demand. Cochlear believes surgery volumes are returning, however, with revenue in the first quarter of FY21 94% of Q1 FY20.
While momentum is positive in developed markets, Cochlear has cautioned that risk remains. Second waves of COVID-19 are likely to remain a reality in the immediate future and may result in restrictions to elective surgery and complications to recovery plans.
ASX biomedical shares have largely outperformed the ASX in 2020. The S&P/ASX 200 (ASX: XJO) is up only around 1% over the year to date, but many ASX biomedical shares have seen much more significant share price growth.
Will this continue in 2021? ASX biomedical investors will certainly be hoping so. There is room to grow for many ASX biomedical shares, meaning future share price growth is definitely a possibility.
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Kate O'Brien owns shares of Cochlear Ltd., CSL Ltd., and POLYNOVO FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has recommended Cochlear Ltd., Nanosonics Limited, and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.