Key Points

  • Moderna (NASDAQ:MRNA) CEO Stephane Bancel thinks the biotech could become the world's biggest vaccine company within the next three to four years.
  • The biotech would have to leapfrog over several major drugmakers to become the largest vaccine company, including Sanofi (NASDAQ:SNY) and GlaxoSmithKline (NYSE:GSK).
  • Success for Moderna's coronavirus vaccine could translate to great prospects for the rest of the biotech's pipeline, but becoming the world's biggest vaccine company so quickly seems improbable.

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Moderna appears to have accomplished what seemed nearly impossible a year ago. In less than 10 months, the biotech developed a novel coronavirus vaccine that seems to be both safe and effective -- highly effective. Moderna announced earlier this week that its COVID-19 vaccine candidate, mRNA-1273, achieved an efficacy of 94.5% in interim results from a large late-stage clinical study.

The company won't have enough safety data to file for an Emergency Use Authorization (EUA) for the vaccine until later this month. But the chances for Moderna to win a Food and Drug Administration EUA should now be very good. Success for the experimental vaccine could also bode well for the biotech's other pipeline programs.

It's understandable that Moderna's executives are feeling really confident right now about the company's future. But I suspect more than a few jaws dropped after reading what CEO Stephane Bancel told EndPoints News: "We could end up being three, four years from now the biggest vaccine company in the world."

Was Bancel simply overly exuberant? Or could Moderna actually become the biggest vaccine company in the world within the next four years?

Scientist holding syringe with needle up to a small globe

Image source: Getty Images.

A steep climb

It's important to first understand just how steep a climb it would take for Moderna to become the world's largest vaccine company. Which company would it need to knock off its perch? The answer depends on how we categorize drugmakers.

Johnson & Johnson ranks as the world's largest healthcare company with a market cap of close to $400 billion. Like Moderna, J&J has a COVID-19 vaccine candidate in late-stage testing. It also won European approval for an Ebola vaccine earlier this year. But it's probably a stretch to refer to the healthcare giant as a "vaccine company."

So which drugmaker is the biggest vaccine company? Merck (NYSE:MRK) is certainly in the running. Its vaccines generated sales of more than $2.1 billion in the third quarter of 2020. Pfizer (NYSE:PFE) wasn't too far behind, with Q3 vaccine revenue totaling $1.7 billion. GlaxoSmithKline reported even higher vaccine sales in the third quarter of around $2.4 billion.

However, Sanofi narrowly wins the prize as the biggest vaccine company based on sales. In the third quarter, the French drugmaker reported total vaccine revenue of nearly $2.5 billion.

On an annualized basis, Moderna would need to generate vaccine sales of $10 billion to become a bigger player in the global vaccine market than Sanofi is now. Remember, though, that the vaccine sales for all of these companies will likely increase over the next few years -- especially those that could launch successful COVID-19 vaccines. To safely lay claim to being the world's largest vaccine company, Moderna might have to make $15 billion or so in vaccine sales by the end of 2024.

What's Bancel thinking?

Moderna's vaccine sales in its latest quarter totaled... $0. All of the company's third-quarter revenue stemmed from grants, primarily external funding for its COVID-19 vaccine program. How does Bancel think that his company could go from $0 to $15 billion in only three to four years?

He's obviously counting on a major success for mRNA-1273. Moderna has already lined up supply deals with the U.S., Canada, the U.K., Israel, Japan, and Qatar. It's also in discussions about a supply agreement with the European Commission. The financial terms of all of these deals haven't been announced. But it's likely that Moderna could rake in $6 billion or more within the next year.

The company has long maintained that if its messenger RNA (mRNA) approach works with one disease, it should work with many diseases. Bancel is no doubt betting that this view will be proved right. The company's pipeline currently includes five other prophylactic vaccines and two cancer vaccines in clinical testing. It is also evaluating several mRNA therapeutics in clinical studies.  

Of course, the company could soon have a boatload of cash to invest in bolstering its pipeline. That's exactly what Bancel seems likely to do. He has suggested that Moderna could use its anticipated newfound riches to advance up to 50 vaccine and drug candidates into clinical testing.

Possibility vs. probability

Could Moderna become the largest vaccine company in the world within four years? It's theoretically possible, but it's also realistically improbable -- at least based on vaccine sales.

It's important to remember that advancing vaccines through clinical testing and winning regulatory approvals usually takes a lot longer than what we've seen during the COVID-19 pandemic. Time won't be on Moderna's side in a quest to leap to the top in only four years.

Moderna also isn't the only drugmaker working on mRNA vaccines. Other rivals could gain ground. And don't expect big companies such as Pfizer, which already has a partnership with mRNA-focused BioNTech, to let Moderna have the potentially lucrative market to itself.

But I think the key point for investors is that we should seriously consider the possibility that Moderna could become one of the biggest vaccine makers in the world in the not-too-distant future, even if it isn't the biggest within four years. A biotech stock with such tremendous growth prospects is one you don't want to ignore.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.