What happened
Shares of Emergent BioSolutions (EBS 1.59%) were trading 3.8% lower as of 3:01 p.m. EDT on Tuesday. The decline came after the U.S. Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) called for a pause in the administration of Johnson & Johnson's (JNJ +0.12%) COVID-19 vaccine.
So what
Emergent BioSolutions contracted to manufacture J&J's COVID-19 vaccine. Therefore, any long-term issues with the vaccine could potentially hurt Emergent.
Image source: Getty Images.
The CDC and FDA stated that they're reviewing six cases of a rare type of blood clot occurring in individuals after receiving the vaccine. The agencies said that the pause is being recommended "out of an abundance of caution" while the review moves forward.
However, this review is expected to take only a few days. The pause on administration could be lifted once the review is over, although the CDC and FDA will probably issue new guidelines for healthcare providers.
Now what
There's a bigger issue for Emergent BioSolutions that could weigh on the performance of the healthcare stock even if the questions related to blood clotting with J&J's vaccine are resolved. The company made a huge mixup with the production of a large batch of the vaccine several weeks ago. This resulted in the U.S. government giving Johnson & Johnson control of the manufacturing facility. This highly visible mistake could negatively impact Emergent BioSolutions' ability to win contract manufacturing deals in the future.
