Who Will Profit Most from Billions of Orders for COVID-19 vaccines?

Posted by Jerry Carter on December 30th, 2020

On the evening of December 11, 2020, the US Food and Drug Administration (FDA) issued the first emergency use authorization (EUA) for the Pfizer-BioNTech COVID-19 Vaccine jointly developed by Pfizer (USA) and BioNTech (Germany).

Before this, Pfizer-BioNTech COVID-19 Vaccine had been approved in the United Kingdom, Canada, Bahrain, Saudi Arabia, and Mexico. On December 8, 2020, the United Kingdom became the first country in the world to initiate large-scale injections. Besides, the vaccine developed by an American biotechnology company Moderna is also expected to be approved soon.

With the surge in orders across the world, investment analysts predict that Moderna, BioNTech, and Pfizer are expected to earn billions of dollars from the COVID-19 vaccine next year. However, BBC News pointed out in a report on the Dec 12th that for these pharmaceutical companies, due to a large number of investment sources for vaccine R&D and the number of companies involved in the production, the opportunity for profiteering may be short-lived.

Who will be the biggest winner of this largest global campaign for the vaccine?

Governments, companies, and non-profit organizations invested billions of pounds to support the launch and testing of the COVID-19 vaccine.

BBC News quoted from a scientific data analysis company Airfinity that so far, 6.5 billion pounds from local governments, 1.5 billion pounds from NGO, and 2.6 billion pounds from pharmaceutical companies have been invested, and the vaccine projects from quite a number of the companies rely heavily on external financing.

Because of this, some companies do not want to be considered "profit from the global crisis", especially after receiving so much external financing. Both Johnson & Johnson and AstraZeneca promised to sell their vaccines at a price that only pays back.

Currently, AstraZeneca's vaccine is the cheapest, at only per dose, and the Moderna vaccine reaches per dose. The prices are not fixed. The low price of the Oxford vaccine is only effective during the "epidemic period". According to forecasts, as early as next year the price will inflate.

Moreover, pharmaceutical companies usually charge different fees to different countries, depending on the affordability of governments. Emily Field, Head of European Pharmaceutical Equity Research at Barclays Investment Bank, pointed out that the wealthy countries that are eager to end the epidemic are now willing to pay high prices.

Currently, global governments and multilateral organizations have placed orders for billions of vaccines. Therefore, in the next few months, various pharmaceutical companies will strive to complete the delivery as soon as possible, and those companies that sell vaccines to countries with strong financial resources can see a return on investment. 

After the completion of the first batch of contracts, it is hard to predict the market for the COVID-19 vaccine. BBC News pointed out that it will depend on many factors, such as how long the immunization will last after vaccination, how many vaccines are successfully put into production, and whether the production and distribution of the vaccine are smooth.

If the SARS-CoV-2 continues to exist like the flu and require annual vaccination, then there will be a multi-billion-dollar market, and companies that produce the most effective and cost-effective products will benefit. 

More than 50 covid-19 vaccines around the world are in clinical trials, and in the coming two years, there may be 20 vaccines on the market, and it will be difficult for drugmakers to charge high prices.

This global competition provided strong proof for the messenger ribonucleic acid vaccine (mRNA vaccine), which is also one of the factors driving the soaring market prices of BioNTech and Moderna. Before the outbreak of the COVID-19 epidemic, BioNTech was working on a skin cancer vaccine, and Moderna was developing an ovarian cancer vaccine based on RNA technology. Once any of these are successful, the rewards will be huge.

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Jerry Carter

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Jerry Carter
Joined: June 15th, 2019
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