mRNA – Pharma’s Next Rising Star?
The future of vaccines is not just about Covid-19
Chief Investment Office27 Jan 2023
  • The pandemic of 2020 highlighted the revenue potential of vaccines for pharmaceutical companies
  • The proliferation of respiratory illnesses & advances in mRNA tech could usher in vaccine golden age
  • Growing R&D spend by Big Pharma will drive a strong pipeline of vaccine products and patent arsenal
  • We continue to favour Big Pharma within the healthcare sector
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A new golden age for vaccines? It has been nearly three years since Covid-19 turned the world on its head. And while the existential threat posed by the pandemic is no longer as acute as it once was, it continues to impact our lives in very real ways, chief among which is the need to be inoculated. This saw vaccines being developed in record speed in 2020 and transform hitherto unknown companies like BioNTech and Moderna into household names. As vaccination rates continue to climb globally, and Covid inches closer towards becoming endemic, the total pie for said vaccines will inevitably shrink.

However, that does not mean pharmaceutical companies are seeing the end of the vaccine party. Quite the opposite, vaccine-related revenues are set to increase moving forward with the debut of commercial Covid-19 vaccines, which are expected to cost significantly higher per dose. Additionally, 2023 is likely see the advent of the first messenger-RNA (mRNA) vaccines for Influenza and respiratory syncytial virus (RSV), which will emerge as new revenue streams of existing vaccine makers. Market participants are betting on a big year for vaccine makers and pharmaceutical companies, as evidenced by the stellar performance of the healthcare sector.

Covid-19 vaccines to go commercial in 2023. Since the onset of the pandemic, vaccine costs have been borne chiefly by governments. However, this is set to change as the market transitions from a public to a private one, welcoming commercial Covid-19 vaccines on board this year. Accordingly, vaccine prices are expected to increase significantly; Pfizer has already stated that it could price its commercial vaccines between USD110 and USD130 per dose, while Moderna expects a price between USD64 and USD100. In comparison, the US government has been paying much lower thus far, approximately USD30 per dose for Pfizer’s vaccine and about USD26 for Moderna’s. While commercial vaccines and their higher prices will not fully offset the reduction in revenue from slowing demand, they will help Covid-19 products remain indispensable to pharmaceutical companies. Pfizer chief executive Albert Bourla expects that their Covid-19 franchise will remain a multibillion dollar recurring revenue generator for the foreseeable future.

Continue to favour Big Pharma within the healthcare sector. Healthcare remains one of our top investment themes, and within the sector we continue to favour Big Pharma as they:

  1. Have a globally diversified revenue stream
  2. Possess the resources and expertise to conduct R&D and ensure patent protection, which will in turn contribute to commercial exclusivity and pricing power
  3. Have the balance sheet strength to acquire prominent industry peers to ensure a continuous pipeline
  4. Are trading at reasonable valuations

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Note: All views expressed are current as at the stated date of publication


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