The sharp rises and falls in pharmaceutical company stocks are prompting major hedge funds to hire doctors, scientists, and analysts to gain expert assessments of market prospects, Reuters reports, citing its sources.
The year 2024 was marked by significant stock price fluctuations in pharma companies, driven by financial performance announcements and updates on various stages of drug trials.
For instance, on November 11, AbbVie’s stock dropped 11% after the company revealed that mid-stage trials for its schizophrenia treatment had failed. On the same day, shares of its competitor, Bristol Myers Squibb, surged nearly 13%. Meanwhile, Novo Nordisk, one of Europe’s largest publicly traded companies, saw its stock climb more than 7% in a single day after it issued a better-than-expected Q3 forecast, boosted by higher sales of its flagship weight-loss drug, Wegovy.
Hedge funds, willing to invest heavily to gain technological or research advantages, are increasingly delving into the intricate processes of the pharmaceutical industry.
Several major hedge funds are now actively recruiting doctors and scientists globally, according to two sources familiar with the HR strategies of these funds. The firms reportedly include Balyasny, DE Shaw, Point72, Schonfeld, Qube, and Squarepoint, which collectively manage over $200 billion in assets. The funds declined to comment.
According to a recruiter and two investors, hedge funds are hiring these experts to join research departments to assess growth prospects of companies, including early-stage drug trials with a high likelihood of regulatory approval.
This approach is not unprecedented. Leading companies regularly hire engineers and meteorologists to monitor weather patterns for precise insights into energy markets.
Pharmaceutical R&D is likely to expand further, supported by declining borrowing costs in the broader economy.
The trend of hedge funds hiring medical professionals and scientists gained momentum in the U.S. following the COVID-19 vaccine approval process. Over the past six months, this trend has spread to Europe, fueled by advancements in AI applications in pharmaceuticals.
European companies have faced heightened volatility during earnings announcements this year, significantly surpassing levels seen eight years ago. Experts believe hedge funds play a notable role in this.
According to the research firm PivotalPath, hedge funds achieved an average return of 8.5% as of the end of October 2024, outperforming the overall industry return of 7.6%.
Source: GxP News, December 24, 2024.
