Pandemic spells profit for pharmaceutical giants like Sanofi-Aventis (SNY), GlaxoSmithKline (GSK) and Merck who represent the top three producers of vaccines to treat H1N1 or swine flu. A couple weeks ago the World Health Organization prepared to declare the first worldwide pandemic in four decades and with that news the aforementioned pharmaceutical stocks began to rise 1%-2.2%
on the board. At that time 27,737 H1N1 infections had been reported across seventy-four countries including 141 deaths. Countries across the globe will be inclined to increase flu-vaccine stockpiles in the hopes of controlling the potential pandemic within their borders.
When the bird flu, H5N1, was a pandemic threat a few years ago the mere production of an effective bird-flu vaccine
paired with a successful clinical trial by GlaxoSmithKline impacted their second quarter positively with a 14% rise in net profits and an 11% rise in sales. At the time it was estimated that the H5N1 vaccine could potentially garner $2 million in annual sales for Glaxo. Impressive!
This just goes to show that not all stocks are in peril -- the human population may be, but that's another story.