12 Stocks to Watch in the Swine Flu Crisis

Roche (RHHBY)
GlaxoSmithKline (GSK)

Swiss company Roche was having a rocky year after it announced a $47 billion bid for biotech firm Genentech. However, its shares got a boost since it manufactures the influenza drug Tamiflu, which is used to treat the virus. A similar situation happened Monday at Glaxo, which makes Relenza, a drug also shown to combat the virus. Now, if both companies can ramp up production -- and the situation escalates -- they could see sales increase as governments stockpile antiviral drugs. (Novartis is reportedly in talks with the WHO to devise a vaccine.)

However, the rallies in both stocks were brief. Indeed, by Tuesday investors were taking profits. The trading appeared to be overdone, says Nomura analyst Amit Roy, pointing out that investors are betting on very large sales of antiviral drugs very soon -- a situation that may or may not come to pass. "The movement is premature at this point," Roy says. "It's suggesting the best-case scenario for Roche and more than the best-case scenario for Glaxo in terms of how much they could sell to replenish the world supply. That is unless they replenish the entire world supply in one go this year, which I think is unlikely."