When the pandemic broke out last year, governments were clueless, experts seemed confused, and people were getting infected in numbers. The death rates shut up, countries’ economies were shut down, and the revival of the entire human activities hinged on the successful discovery of a coronavirus cure: vaccine and drug. Medical experts were pessimistic that a vaccine in one year would only be a miracle if not impossible. But within a few months, biotech companies were entering different trial stages for vaccine development, thanks to the use of AI and some companies that were working on vaccine candidates for the treatment of cancer like BioNTech and Moderna.
Professor Ugur Sahin, his wife, and a team of other researchers were previously working on a vaccine candidate that is capable of counteracting cancer cells. The mRNA vaccine increases protein translation and activates potent immunity against infectious diseases like Zika and Influenza viruses and if successfully channeled could be the solution for a Covid-19 vaccine. And it was.
With each announcement of successful trial results, hopes lit up, and investors’ sentiments were enkindled, driving up their expectations of investing in the sector. With just the announcement of the BioNTech/Pfizer collaboration, Pfizer’s stock rose by 7% and BioNTech’s stock jumped by 156% as of March.
Investors’ Interest In Biotech Stocks
Investment experts and investors began to bet big on biotech stocks forecasting that BioNTech and Moderna, companies with the most promising vaccine so far, will make billions of dollars by next year. Cory Kasimov, JP Morgan analyst, commended BioNTech for its work and said that the investment bankers “certainly hope they’re successful!”
That being said, Kasimov worries that investors’ “recent focus around a Covid-19 vaccine” has led to a “substantial share upside” for the German stock market -so much upside, in fact, that now JP Morgan feels compelled “to downgrade to Neutral on valuation”.
But while our attention is drawn to the pandemic and a lasting solution, what is to be expected of biotech companies and their growth with the coronavirus vaccine and treatment development going forward?
Moderna, BioNTech, and Novavax are having a good time in the stock market which reveals heightened investor expectations on the companies. As of the end of March, BioNTech stock was €93 but had climbed as high as €106 in December 2020. On the 16th of April, after regulators halted the rollout of Oxford and AstraZeneca vaccine candidate, the stock hit the record price it had since the company went public at €118.35 per share.
In February, Moderna stock rose to an all-time high of €154.56 but fell to €136.42 on the 16th of April. Novavax stock had a stellar run, having more than a doubling within two months earlier this year. Its stock price skyrocketed to €268.20 in February but had fallen to €170.50 on the 16th of April. Notwithstanding the fall in the stock price, in March, the company had a 1,128 % increase in its share price.
Experts have continued to say that it is hard to project how high stocks of growing biotech companies can go, especially companies without other vaccine or drug candidates in the pipeline for research. For this reason, some believe the stocks may have risen too high, too soon, and too fast. But someone shares a different sentiment.
Dr. Stefan Adams, a German medical consultant, believes that the biotech industry is the new cash cow. According to him, viral infections are to be seen as part of human existence and this will always engage the medical research industry. Cancers are also another big challenge such that a successful vaccine and drug that will cure this intractable disease will be a major medical and financial breakthrough for the industry.
Coronavirus Vaccine Prices And Rollout May Impact Biotech Growth
Some biotech companies are not looking to cash in profits on the pandemic. This is why some of them have set their vaccine prices just to cover their costs while the pandemic lasts. Another factor could be that some of them received funding from government, and nonprofit organizations, some of the financial details have remained a secret to the public.
AstraZeneca and Novavax have the lowest price for their vaccine candidates with their prices ranging between $4 to $8 and $3 respectively. AstraZeneca also has the highest number of pre-ordered vaccines in the western world. A contract signed with the European Commission on the 27th of August, 2020 puts the ordered vaccine from the Union at 300 million doses with room to order another 100 million. The cost of the vaccine reached between them was redacted from the published contract.
Although the biotech industry does not only participate in vaccine and drug development for viral diseases, this has shown to be one of the most successful vaccine candidates in terms of the number of people that get administered the vaccine over a short period of time. As history has shown, there has never been a global vaccination agenda in human existence.
According to Statista’s Coronavirus vaccine sales projection, 2021 will be the year with the highest sale of the vaccine and will rake in $52.4 billion for only BioNTech/Pfizer, Moderna, Johnson & Johnson, and AstraZeneca. 2022 and 2023 will see a decrease in sales with more people being vaccinated in 2021 and more vaccines getting approval. Moderna may turn out to be the company with the highest number of vaccine sales accruing a whopping sum of $43 billion. This Massachusetts-based biotech start-up prior to the coronavirus vaccine development had never made a profit.
Vaccine development is a painstaking, tedious, and expensive venture. When successful, its profits could be rewarding most times. During the pandemic, the vaccine prices from some of the companies are quite low compared to what should have been the actual cost. Beyond the pandemic, biotech firms are likely to hike the prices of the vaccine, a move that financial analysts have forecasted will earn the industry $40 billion annually for only Coronavirus vaccines and drugs.
Disclaimer: This article is not a guide to biotech stock investment and should not be taken as such. It was only written to explore the impact of the Coronavirus vaccines and drugs development and sales on the biotech industry.