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Can COVID Vaccine Makers Benefit From the Biden Administration?

By Brian Orelli, PhD and Keith Speights - Feb 12, 2021 at 9:12AM

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More doses mean more profits, but the companies and the government need to come to a deal.

In this video from Motley Fool Live, recorded on Feb. 1, contributors Brian Orelli and Keith Speights discuss the implications of President Joe Biden's administration buying an additional 200 million doses of coronavirus vaccines, split between Moderna (MRNA 0.70%) and the duo of Pfizer (PFE 3.00%) and BioNTech (BNTX 1.32%). On Feb. 11, Biden announced that deals had been finalized with the companies, although critical details of pricing were left out. The additional doses are expected to be delivered by the end of July.

Brian Orelli: Moving on to our third topic. The Biden administration is interested in buying another 100 million doses from Pfizer and a 100 million doses from Moderna. That would be in addition to the 400 million doses those two companies have already contracted to sell. That gets up to 600 million doses. Two doses per person, so that will be enough to cover 300 million people. Seems like it's another windfall for the companies. Although it's still not clear to me whether it's going to be a one-shot windfall or whether this can be recurring revenue over many, many years.

Keith Speights: Just do the math. I think the Pfizer vaccine is right at $20 a dose, a little less than that. But if you said $20 a dose to make the math simple, that's $20 times an additional 100 million doses. That's $2 billion dollars. Now Pfizer has to split that. They share that 50-50 with BioNTech. But still you're looking at another billion-dollar deal for Pfizer and $2 billion dollars or perhaps more for Moderna because they charge a little more for their vaccine. We're talking some pretty big bucks there with this additional supply agreement assuming it goes through. It's not a finalized deal at this point.

Orelli: They're still in talks. It will be interesting to see what the actual prices end up being here. The government subsidized Moderna substantially when they were in development. I thought they would give a better deal for the early doses than for the latter doses.

Speights: Brian, just a thought. Do you think the Johnson & Johnson (JNJ 1.46%) news or Novavax (NVAX -0.27%) news will have any impact on the Biden administration's pursuit of securing these additional doses with Pfizer and Moderna?

Orelli: It may give them a little bit of a leverage in terms of knocking down the price. "If you're not going to give us the additional doses, we can go to Johnson & Johnson and ask for more. Well, first of all, we're going to be getting doses from Johnson & Johnson and then on top of that we can even go to them." I think being able to play multiple companies off each other. We should throw in Novavax into this mix since they have the U.K. data and so presumably they're running a clinical trial in the U.S. Presumably that data will look just as good as the U.K. data.

Speights: For our viewers' benefit, if you didn't already know, the U.S. government already has supply deals in place with Johnson & Johnson and with Novavax each for 100 million doses, if I recall correctly. They may have options.

Orelli: There were options for buying additional doses at a set price.

Speights: We're going to see the laws of supply and demand at work here in the COVID vaccine market. Obviously the demand is high, but the more supply that could influence, impact the pricing.

Orelli: Johnson & Johnson has committed to not making any money during the pandemic off of the vaccine. That puts pricing pressure on everybody else who would like to make some profit.

Speights: I haven't seen the final price tag, but I think it was in the ballpark of $10 a dose is one price they had floated around. A lot cheaper at any rate than either the Pfizer or Moderna vaccines.

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Stocks Mentioned

Pfizer Inc. Stock Quote
Pfizer Inc.
$51.59 (3.00%) $1.50
Johnson & Johnson Stock Quote
Johnson & Johnson
$182.29 (1.46%) $2.63
Novavax, Inc. Stock Quote
Novavax, Inc.
$51.67 (-0.27%) $0.14
Moderna, Inc. Stock Quote
Moderna, Inc.
$144.27 (0.70%) $1.01
BioNTech SE Stock Quote
BioNTech SE
$134.04 (1.32%) $1.75

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