Why has Biotech eclipsed Pharma as COVID euphoria grips markets?

As a pandemic-weary world closely watches the race to develop an effective COVID-19 vaccine, pharmaceutical giants AstraZeneca and Pfizer dominate headlines, and equity markets roar. One might assume this level of media attention for the two vaccine contenders would translate to stellar stock returns for pharma. However, a closer look at performance tells a different story, where smaller biotechnology stocks are largely outpacing large pharmaceutical stocks.

Biotech and pharma companies might appear to be similar, and at broader level classifications under Industry Classification Benchmark (ICB) they’re indeed grouped together. The two types of companies comprise a combined sector on the third classification level—and are further combined with additional sectors to comprise the top-level Health Care industry. 

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