Stocks of Vaccine Makers Tank After Biden Move

vaccine makers

The U.S. has decided to back a temporary suspension of intellectual property (IP) rights for Covid-19 vaccines.

President Biden’s top trade adviser, Katherine Tai, said that while the administration “believes strongly” in IP protections, it would support a waiver of those rules for Covid-19 vaccines.

Stocks of the vaccine makers tumbled after the Biden administration stance on vaccine patents was released.

This measure to allow countries to temporarily override patent rights for pandemic-related medical products was proposed at the World Trade Organization by India and South Africa in October. It has since been backed by almost 60 countries. The EU has previously opposed the waiver, along with the UK and Switzerland.

A waiver will allow any pharmaceutical manufacturer in the world to make “copycat” vaccines without fear of being sued for intellectual property rights infringement.

Countries like South Africa and India are happy about this move. But the vaccine makers are up in arms. It removes incentives to produce future vaccines. Companies will not spend billions of dollars for a zero return on investment.

U.S. vaccine makers also warned that scrapping patents for Covid shots would risk handing novel technology to China and Russia.

Vaccine makers  — from China to Europe to the U.S. — saw their stock prices plunge by double-digit percentages on this news about intellectual property. Pfizer was among the U.S. vaccine makers affected.

This is the wrong “medicine” to the problem of getting vaccines to places like Latin America.

Instead, the U.S. should export our excess supplies of vaccines. And it should also expand our capabilities to produce more vaccines. It has always been difficult to do “tech transfers” when one party does not have the personnel and infrastructure to use the knowledge.

The Big News

Pfizer Donates Vaccines to Olympics

Pfizer and BioNTech will donate their Covid-19 vaccine to Olympic athletes ahead of the Tokyo Summer Olympic Games. This is part of the efforts to ensure the event is safe and goes ahead on schedule in July. The vaccine makers signed a deal with the International Olympic Committee to vaccinate the competitors and their delegations from the end of May. The aim is that they receive their second shots before they arrive in Tokyo.

Moderna Reports First-Ever Profit   

Moderna reported its first ever quarterly profit. It sold $1.7 billion worth of Covid-19 vaccines in the first quarter of the year. Moderna said total revenues surged to $1.9 billion in the first quarter as it sold 102 million doses of its coronavirus vaccine. It reported net income of $1.2 billion compared with a loss of $124 million in the same period a year ago. The company said it has so far signed vaccine contracts worth an expected $19.2 billion in total revenues for 2021. It expects to deliver up to 250 million doses in the second quarter.

India Worsens

India recorded new all-time highs of more than 412,000 daily new cases and nearly 4,000 deaths on Wednesday. Meanwhile, daily vaccinations fell to a two-month low of just 1.5 million shots amid a scarcity of vaccines. India has now had over 21 million cases in total. That trails only the U.S. More than 230,000 people are known to have died from Covid in India. But doctors, experts and most Indians believe the true toll is far higher.

Moderna Booster Shot Increases Immunity vs Variants

Moderna (MRNA) said that early human trial data showed that a third dose of either its current COVID-19 shot or an experimental new vaccine candidate increased immunity against the Brazilian and South African variants. The results showed that booster shots of either version of the vaccine increased antibodies against all of the variants of Covid-19 tested in the trial. But the new booster had a bigger response against the South African variant than the original vaccine. 

Flu Cases Plummet

Influenza cases have dropped to rock-bottom levels. It’s largely thanks to the public-health measures taken to keep Covid-19 from spreading. For example, in the U.S. there were about 600 deaths from influenza during the 2020–21 flu season. This compared with 22,000 in the year before. The downside: fewer cases make it harder to plan the vaccine for next year’s flu season. And toddlers who evade a mild case of flu now could be more susceptible to the flu later in life.

The Coronavirus Numbers

Here are the numbers from Thursday at 8 a.m. ET from Johns Hopkins University:

  • 155,314,752 Infected Worldwide
  • 1,214,619,097 Vaccines Given Globally
  • 3,244,926 Deaths
  • 32,558,384 Infected in the U.S.
  • 249,566,820 U.S. Vaccine Doses Administered
  • 579,282 Deaths in the U.S.

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What’s Next

Rotation and reflation remain the order of the day on the stock market.

The Dow Jones Industrial Average rose almost 100 points to a record close Wednesday while the S&P 500 edged up 0.1%. The Nasdaq fell another 0.4% as the big tech stocks had another poor day.

Energy and basic materials stocks continued moving up as commodity prices move skyward.

Meanwhile, tech, growth and momentum stocks continued to face pressure. The proxy for those type of stocks –  Cathie Wood’s ARK Innovation ETF – fell another 1%. It now trades about 30% off its highs hit earlier this year. It is down 10% year-to-date.

I don’t expect this to change for the foreseeable future.

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Yours in Health & Wealth,

Tony Daltorio

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