Vax

Moderna drops its first profit, and the US (potentially) drops Covid-19 vaccine patents

Friday, May 7, 2021 by Robinhood Snacks | Disclosures

Another one... (DJ Khaled). On Wednesday, Pfizer delivered the first Covid-19 vaccine profit. Yesterday, Moderna delivered its first profit — period.

  • $1.7B: Moderna's Covid vax sales from January to March — a major glow up from last year, when it made just $8M in total revenue.
  • $1.2B: Moderna's big-shot profit. Pfizer did double Moderna's vax sales, but its vax profit is estimated at just $900M.

Terrible earnings timing... On Wednesday, the Biden admin announced it supports a WTO proposal to temporarily waive companies' intellectual property protections for Covid-19 vaccines, to help end the pandemic. The US was originally opposed, saying IP protection provides a key incentive for innovation. If the proposal passes, others could develop shots using public patents (without getting sued). Vax-makers' recipes would be open to all.

  • The reasoning: New Covid cases are hitting global records. But as of mid-April, 87% of vax doses distributed went to wealthy countries. The WTO thinks sharing IP would allow poorer nations to develop vaccines.
  • The investor response: Moderna shares have plunged 10% since Wednesday, and Pfizer shares dropped 5%. J&J, which isn't taking vax profits, barely budged.
  • The company response: Pfizer's CEO said patent-sharing would discourage companies from developing products for the next pandemic. The two who decided to profit from the vaccine (Pfizer and Moderna) were the fastest to get FDA-authorized. Moderna said the proposal won't affect it because it's already not enforcing Covid patents during the pandemic.
THE TAKEAWAY

Recipes are valuable, but don't forget the chef... and the ingredients. Patents don't come with the ability to produce complex drugs at scale. Pharma companies say public patents won't help curb the pandemic short-term, because of the challenges that come with producing Covid vaccines. Including: setting up complex factories, securing scarce raw materials, and hiring skilled employees to operate new tech. Even Moderna and Pfizer haven't been able to scale fast enough to meet demand.