Everyone is wondering which company will win the race to produce a coronavirus vaccine. With 31 candidates in clinical development and six of those in phase 3 studies, competition is high.
That's if we expect only one winner. But the fact is, one winner likely won't be sufficient, a fact that becomes clear when we consider the number of people who need the vaccine and the manufacturing capacity of any single company. Let's take a look at some of the numbers and what all of this means for those in the vaccine race, as well as investors.
To stop the coronavirus from spreading, the goal is to reach herd immunity. That's when most of the population is immune to an illness, halting the spread. Experts have said 70% of the population must be immune to the coronavirus to reach that point. With the world's population totaling 7.7 billion, about 5.4 billion people will need vaccination.
Now, let's see where leaders in the race stand in terms of supplying a possible vaccine. The following are all involved in phase 3 or phase 2/3 trials. Moderna (NASDAQ:MRNA) is set to deliver 500 million doses annually, with the possibility of increasing that to 1 billion as of next year. AstraZeneca (NASDAQ:AZN) says its manufacturing capacity is 3 billion doses. Pfizer (NYSE:PFE) and its partner BioNTech (NASDAQ:BNTX) aim to produce more than 1.3 billion doses by the end of 2021.
Does supply meet demand?
Before calculating whether supply meets demand, keep in mind that certain vaccines involve two doses. That's the case for Moderna's program and the Pfizer/BioNTech team. Though AstraZeneca tested its vaccine in both one- and two-dose treatments, researchers said the strongest immune response was seen in the two-dose group. So, when regulators approve any vaccine, its number of doses will affect how much supply is needed for a population.
And even if all three vaccine candidates mentioned above gain approval, supply will still fall short of demand, regardless of a one- or two-dose schedule -- at least considering today's manufacturing capacity. That's probably one reason why countries have been scrambling to pre-order vaccines from more than one company.
For example, the U.S. has pre-ordered doses of potential vaccine candidates under development by Moderna, AstraZeneca, Pfizer/BioNTech, and others. Through a $1.5 billion investment this month, the U.S. ordered 100 million doses from Moderna; it has offered $1.2 billion to AstraZeneca for 300 million doses; and for a $1.95 billion investment in Pfizer/BioNTech's program, the U.S. will own 100 million doses. Europe and the U.K. have also signed supply agreements with vaccine developers.
Making extra sure they're ready
All this willingness to order vaccines from several producers might also be a case of countries hedging their bets. If one company's program fails, at least there's a chance of obtaining a vaccine elsewhere. But knowing the supply problem that lies ahead -- even if a few vaccine candidates are approved -- it's likely governments will have to seek doses from several vaccine makers well into the future, and they know that.
Pricing is another concern, and prices so far have varied. For instance, the U.S. is paying $10 a dose for 100 million doses of Johnson & Johnson's (NYSE:JNJ) investigational vaccine. And Moderna has recorded some small volume orders in the range of $32 to $37 a dose. It's too early to say whether lower-priced vaccines will have an edge. Supply and product quality will determine that further down the road.
Crossing the finish line
So, to answer our question: Yes, there is room for more than one winner in this vaccine race. But these winners may not all cross the finish line at the same time. The one that does, though, is likely to see its shares climb. Companies that are ahead from a timeline perspective -- such as Moderna, AstraZeneca, and Pfizer/BioNTech -- stand a good chance if the data cooperate.
And then there may be a later winner (or winners): a biotech or pharmaceutical company whose vaccine candidate is in phase 1 or 2 studies today. If that player's potential vaccine eventually performs well, revenue and share gains will be on the horizon.
The key point to keep in mind here, regarding the companies close to the finish line and those further behind, is this: Clinical trial results will be the first benchmark to determine the winners of this race. So, if you're looking to get an edge on who will dominate the market, be on the lookout for clinical trial reports this fall.