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The Multibillion-Dollar Question: How Long Do COVID Vaccines Last?

By Keith Speights - Mar 21, 2021 at 9:03AM

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Some stocks could be big winners and losers depending on what the answer to this question is.

Americans have received more than 120 million COVID-19 vaccine doses. Another 2.4 million shots are administered each day. Within the next few months, every adult in the U.S. who wants to be vaccinated will be.

But there's a big unanswered question that affects anyone who receives a COVID-19 vaccine: How long will the vaccines provide protection against novel coronavirus infection? This isn't like the old TV game show The $64,000 Question, though. How long COVID-19 vaccines last is a multibillion-dollar question.

Physician wearing a mask with gloved hands holding a syringe and a red question mark in the foreground

Image source: Getty Images.

Billions of dollars on the line

Pfizer (PFE -0.15%) and BioNTech (BNTX 5.57%) were the first to win U.S. Emergency Use Authorization (EUA) for their COVID-19 vaccine, BNT162b2. In February, Pfizer estimated that the vaccine would generate sales of around $15 billion this year based on supply deals in place at that time.

However, since then the two companies have received additional orders for BNT162b2 -- 100 million more doses for the U.S. and 200 million additional doses for the European Union. These deals should boost BNT162b2 sales above $20 billion in 2021. 

Moderna (MRNA 8.73%) won EUA for its COVID-19 vaccine, mRNA-1273, soon after Pfizer and BioNTech. The biotech expects to generate $18.4 billion in sales this year from the vaccine. 

Johnson & Johnson (JNJ 0.91%) secured EUA for its single-dose COVID-19 vaccine in late February. The healthcare giant is selling the vaccine at cost during the pandemic for around $10 per dose. J&J hopes to supply at least 1 billion doses of its vaccine this year. Assuming it achieves that goal, the company will make roughly $10 billion in sales. 

These three vaccines alone could together make well over $48 billion this year. And we haven't included the sales for COVID-19 vaccines from AstraZeneca (AZN 1.05%) and Novavax (NVAX 17.46%), both of which could win U.S. EUA in the near future.

The best guess right now

No one knows for sure just how much of that enormous revenue these companies will make in 2021 will be recurring. In theory, COVID-19 vaccines could provide protection against infection for years. In that case, sales of vaccines would plunge in 2022.

On the other hand, let's assume that booster doses are needed every six months or so. That scenario would mean that Pfizer, Moderna, and the other companies could count on significant revenue every year.

The problem lies with our original question. We still don't know how long the immunity provided by COVID-19 vaccines will last. There's a good reason for the mystery: Not enough time has gone by since the first participants in clinical studies were fully immunized.

New variants could also be critical. Even if current COVID-19 vaccines provide long-lasting protection against existing coronavirus strains, the emergence of new viral variants could require more frequent booster shots.

Probably the best guess for right now is to go with Moderna CEO Stephane Bancel's prediction that COVID-19 will be like the seasonal flu. If he's right, annual vaccinations will be needed.

Potential winners and losers

A recurring COVID-19 vaccine market could be quite different from what we're seeing in 2021. Governments across the world are currently trying to get their hands on any vaccine that has won or is likely to win authorization. Going forward, though, other factors could be important.

As vaccine supply grows large enough to meet demand, price will become a bigger issue. That could benefit Johnson & Johnson since its vaccine requires only a single dose. However, Moderna is evaluating a next-generation COVID-19 vaccine that could also potentially be given as a single dose. Don't be surprised if Pfizer and Novavax, both of whose vaccines have high efficacy with two doses, move forward with testing single-dose regimens. 

Perhaps the most critical differentiator in the future, though, will be how quickly companies can develop safe and effective vaccines targeting new coronavirus variants. That could give the edge to Pfizer/BioNTech and Moderna. Their messenger RNA technologies enable rapid development of vaccines.

AstraZeneca and Johnson & Johnson could be at a disadvantage because of their adenovirus delivery methods. It's possible that individuals could build immune resistance to the adenoviruses used.

Generally speaking, the biggest winners if frequent booster shots are needed will probably be the relatively smaller biotech stocks instead of the big pharma stocks. BioNTech, Moderna, and Novavax would feel the impact of strong recurring revenue from COVID-19 vaccine sales more than AstraZeneca, J&J, and Pfizer would. However, if it turns out that COVID-19 doesn't become similar to the seasonal flu, these biotech stocks would likely be the biggest losers.

When will we know the answer to the multibillion-dollar question looming over all of these drugmakers? Probably by the fourth quarter we'll at least have a pretty good sense of whether or not annual booster doses will be needed. That's when participants in the late-stage studies conducted by Pfizer/BioNTech and Moderna will have been fully vaccinated for at least one year. 

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$147.66 (8.73%) $11.86
Pfizer Inc. Stock Quote
Pfizer Inc.
$53.91 (-0.15%) $0.08
Johnson & Johnson Stock Quote
Johnson & Johnson
$181.09 (0.91%) $1.63
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$67.40 (1.05%) $0.70
Novavax, Inc. Stock Quote
Novavax, Inc.
$55.29 (17.46%) $8.22
BioNTech SE Stock Quote
BioNTech SE
$166.96 (5.57%) $8.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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