Who Is — And Will Be — Making Money From COVID-19 Vaccines?

Schroders' Expert John Bowler Analyzes The Pharmaceutical Groups Involved In COVID-19 Drug Development, Emphasizing That Their Efforts Will Be Rewarded In The Future, Despite Current Low Benefits.

The distribution of COVID-19 vaccines is picking up pace globally. The speed at which drugmakers were able to discover successful vaccines, undertake the necessary clinical trials, and then bring them to market in large volumes is testament to the ingenuity and innovation within the pharmaceutical and biotechnology industries. It shows what can be achieved when all participants, governments as well as companies, work together. For investors, a key question is whether the vaccines will make money for the companies who invented them, and for their shareholders. So far, the stellar success of the vaccines from a public health point of view hasn’t been reflected in the share price performance of the companies involved.

Key Actors: John Bowler - Fund Manager of Schroder ISF Healthcare Innovation - goes through the main companies involved in COVID-19 drug development, in order to find out who is profiting from it. Moderna, Inc. MRNA enjoyed a share price spike alongside the announcement of its successful vaccine in November. BioNTech SE BNTX experienced a similar boost although the shares of Pfizer, Inc. PFE made smaller gains. Meanwhile, AstraZeneca PLC AZN shares have lost value. However, according to Bowler, some of the differences among the four companies’ share price performance may be partly down to the technology behind the vaccines.

Moderna And BioNTech Stock Rise: BioNTech and Moderna are specialist biotechnology firms. The success of their vaccines vindicates the investment these firms have made in the novel mRNA technology. The value of this technology is shown by the speed at which the COVID-19 vaccine candidates were produced, simply by using the genetic code of the virus. This mRNA technology will have many other applications aside from COVID-19. Therefore, the share price gains enjoyed by Moderna and BioNTech reflect the future potential of mRNA technology, rather than the discovery of the COVID-19 vaccines specifically.

Phase 1 Of Vaccination Campaign: Furthermore, the companies behind the vaccines have the public good, rather than profits, at the forefront of their considerations, so that investors need to distinguish between the companies that have developed the vaccines and those who are part of the vaccine production supply chain. The developers – such as Pfizer, Moderna, and AstraZeneca – have largely viewed this first phase of the vaccine drive as an act of public service. It’s part of the social contract such companies have: they want to show the value that an innovative biotechnology industry brings to society and to demonstrate how they can use their expertise to tackle a public health emergency.

Low Prices... At Least For Now: AstraZeneca is the most obvious example as it is explicitly producing its vaccine on a not-for-profit basis. However, even Pfizer/BioNTech and Moderna are not charging real commercial prices for their vaccines, and so are not making substantial profits. On the other hand, the companies involved in the vaccine production process are participating on a much more commercial level. They will therefore see a greater financial benefit from this current "emergency" phase of the vaccine roll-out.

The Time Of Greater Rewards Will Come: However, the next phase may bring more substantial profits, since the current cohort of available vaccines is unlikely to be the last, given the number of COVID-19 variants emerging meanwhile. Ultimately, suggests Schroders' expert, COVID-19 vaccines are likely to become part of the existing winter season vaccination programme. It may well be that a combined flu/COVID-19 one-shot vaccine becomes available; companies are already working on that.

More Commercial Vaccines On The Horizon: Bower concludes his review adding that it’s in this next phase that developers like Pfizer/BioNTech and AstraZeneca will start thinking about COVID-19 vaccines in more commercial terms, just as the producers of flu vaccines do. That will then provide more enduring, long-term value to these companies. And the companies in the supply chain will continue to benefit too, along with the developers.

This article originally appeared on Financialounge.com and was translated from Italian to English. It does not represent the opinion of Benzinga and has not been edited. For news coverage in Italian or Spanish, check out Benzinga Italia and Benzinga España.