Why is the CSL share price running higher?

Posted: 8 March 2022 1:22 pm
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Shares in biotech giant CSL have been nearly flat over the last 12 months but are trading up today.

Shares in biotech giant CSL (ASX: CSL) are among the better performing stocks on the ASX on Tuesday, bucking the overall market trend amid uncertainty over the Ukraine conflict.

At the time of writing, the stock was up 2.9% to $256.90.

What is bolstering the CSL stock price?

Part of the gains can be attributed to the investor shift into defensive sectors like pharmaceuticals, amid concerns over the economic fallout of Russia's invasion of Ukraine and the tough sanctions imposed by Western countries. Other pharma stocks such as ResMed (ASX:RMD) were also up more than 2%.

However, investors are cheering CSL shares in particular after the company won regulatory approval for its new generation of influenza vaccine, for use on toddlers ahead of the winter flu season.

Dubbed the "super jab", the Flucelvax Quad is a cell-based influenza vaccine that is considered significantly more effective than conventional protein-based shots.

The Therapeutic Goods Administration first approved its general use last March and since then CSL's vaccine division has sold more than 100 million doses. Sales could be much higher now after the approval was extended this week to children 2 years or older.

Health experts expect this year's flu season to be the worst since the pandemic began because of the reopening of the international borders and Australians moving about more freely.

Children younger than 5 as well as the elderly are typically at a higher risk, with NSW Health estimating about 10% of flu patients going to hospital needing intensive care treatment.

Diversification

CSL, which is the world's largest maker of blood plasma treatments and currently gets more than three-fourths of its revenue from the segment, has been trying to diversify its product portfolio. The Flucelvax jab will certainly be another step towards its objective.

Its influenza vaccine business, Seqirus, recently received approval from the U.S. Food and Drug Administration (FDA) for the first-ever adjuvanted, cell-based influenza vaccine and was the star performer in the first half of the financial year.

Sequiris revenue jumped 17% to US$1.69 billion, thanks to the sale of a record 110 million doses of seasonal influenza vaccine. By comparison, CSL's overall revenue firmed 5% to US$6.04 billion.

CSL has this week also announced its mammoth $16.4 billion takeover of Switzerland-based Vifor Pharma (SWX: VIFN), a global leader in iron deficiency therapies and also focuses on nephrology, cardiology and rare diseases, further diversifying the group's product base.

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