Investors may be looking forward to some down time, but new and enduring themes keep popping up. This week we discuss which biopharma stocks are on the nice list, how Mexico can secure a more prosperous new year, where the puck may be going in clean energy and the gifts that quantum computing could bestow.
Senior U.S. Biopharma Analyst Tim Anderson recently re-launched coverage on Global Pharmaceuticals & Biotechnology stocks, including 11 U.S.-based large caps.
In his view, the fundamentals for the industry are mixed. On the upside, there is room to innovate across many disease areas like obesity and Alzheimer’s. Tim estimates the obesity market could exceed $100 billion in size, among the biggest ever. Elsewhere, immunotherapies for cancer, gene therapies and new therapies for autoimmune-related diseases are proof that progress continues to be made. But negatives for the industry include “the 3 Ps”: patent cliffs between now and the end of the decade could disrupt P&L; pricing power is in negative territory across major markets; and politics—the industry remains a target of Democrats and Republicans.
In late November, President-elect Trump announced plans to impose a 25% tariff on products entering the U.S. from Canada and Mexico.
Head of LatAm and Canada Economic Research Carlos Capistran highlights that Mexico is heavily exposed to U.S. tariffs—the country trades 40% if its GDP (gross domestic product) with the U.S. and sends the U.S. more than 80% of its exports. At 8% of GDP, Mexico’s trade surplus with its northern neighbor has doubled since 2015. If tariffs were introduced, Carlos thinks the Mexican peso would be the first shock absorber, falling by nearly the same amount as the tariff rate. In Carlos’s view, the 25% tariff announcement is an opening move in complex negotiations, and he expects Canada and Mexico to show willingness to negotiate to avoid tariffs. To reduce the probability of tariffs, Mexico likely needs to cut its growing trade deficit with China, currently around 6% of GDP.
Our December Clean Energy Symposium featured discussions on an array of energy sources, from solar and wind to nuclear and geothermal.
Reliability and resilience were key themes, especially as much of the growth in demand is for 24/7 power. This requires more collaboration between the demand drivers, like datacenters, and the utilities and regulators. At the most well-attended panel, speakers highlighted nuclear energy’s potential for a cleaner, more resilient, and secure energy market. As for renewables, storage is the key enabler. Utility scale demand for storage is expected to grow 100-400GW by 2030. Without storage, renewables create an imbalanced grid since these technologies don’t produce the same amount of power throughout the day. One-third of the solar and wind capacity in the U.S. will require storage repositories by 2030. Sodium-ion and LFP (lithium iron phosphate) batteries are gaining attention but safety and weight limitations remain key concerns for large scale deployments.
