It may be the time for the GlaxoSmithKline (NASDAQ: GSK) share price to jump, as it is striving to position itself on top of its competitors by participating in what seems to be the first malaria vaccine that just received approval by the EU authorities to be used on humans.
This is a breakthrough as malaria is a terrible disease that affected/affects millions and millions. GSK was smart about taking part in the research and development of a vaccine. Not only that, it will only charge a premium of 5% margin above the manufacturing costs as those suffering the most, and where the vaccine is needed the most are from poor countries in Africa.
That being said, what has GSK to gain? A lot, we may say, if you’re judging by the evolution of its social media presence in the last few years.
There’s a tough competition in the Big Pharma industry with players like Novartis, Bayer, Johnson & Johnson, etc, trying to tackle each other for a jump of one place in the top ten pharmaceutical companies in the world.
The one thing that GSK was doing best, and ahead of its competitors, was social media integration and recognition. Basically communicating with customers in a more effective way when compared with others in the industry. Yet this has changed in the last few years. They have gone from the number one most social media active pharma company in the world, all the way down to the seventh. This kind of action, like the news we’ve started this article with, has the effect of solving this problem and bringing the company into public awareness.
When it comes to the company’s share price, we can see it is a cyclical one. This is in the sense that (and probably the whole sector is a defensive one like this), it goes in the opposite direction when it is compared with the monetary policy of the central bank.
The move from the $55/share to the current $42 level took place in the last two years. This is even after the action in the United States where pretty much every other sector made historical moves higher, but this was not the case for the pharmaceutical industry.
Taking into account the Federal Open Market Committee next week and the latest developments in the global growth and other challenges Fed is facing. I would say they are not going to raise rates anytime soon, so I am favoring call options if Fed does not hike, and with a one month or even end of the month expiration date. The expiry simply depends on how aggressive you wish to be.
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