What happened
Shares of BioNTech (BNTX +1.30%) were jumping 5.9% higher as of 2:50 p.m. EDT on Wednesday. The solid gain came after BioNTech and Pfizer (PFE +1.94%) announced that they had signed a letter of intent with South African biopharmaceutical company The Biovac Institute Ltd to manufacture their COVID-19 vaccine for distribution within the African Union.
In addition to this news, COVID-19 vaccine stocks as a group continue to enjoy momentum because of concerns about the delta variant. The Centers for Disease Control and Prevention (CDC) stated earlier this week that the delta variant now accounts for 83% of all new COVID-19 cases in the U.S.
Image source: Getty Images.
So what
Biovac is expected to produce more than 100 million doses annually after it reaches full operational capacity. All of these doses will be distributed to the 55 countries in the African Union. The South African company was a natural choice as a partner to make the Pfizer-BioNTech COVID-19 vaccine. Biovac has worked with Pfizer since 2015 in producing and distributing pneumococcal vaccine Prevnar 13.
BioNTech investors liked the agreement because it increases the production capacity for the Pfizer-BioNTech COVID-19 vaccine. Although Pfizer and BioNTech don't make as much money per dose with the African Union sales, the added capacity will enable the companies to churn out more doses for other markets that pay a higher price per dose.
Now what
It's going to take a while before Biovac is in full swing with making COVID-19 vaccines. Pfizer and BioNTech hope to incorporate the South African company's Cape Town facility into their vaccine supply chain by year-end. Biovac's production of the COVID-19 vaccine will begin in 2022.
