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Why Johnson & Johnson Will Be a Bigger Winner With Boosters Than Pfizer and Moderna

By Keith Speights – Oct 19, 2021 at 5:52AM

Key Points

  • An FDA panel recommended J&J vaccine boosters without restrictions imposed on mRNA vaccines.
  • J&J should be a bigger short-term winner with boosters than Moderna or Pfizer.
  • Over the longer term, mRNA vaccines are likely to be more successful than J&J's vaccine.

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At least initially. It could be a different story over the longer term.

It's looking like COVID-19 boosters will go three-for-three in winning authorizations.

An advisory committee to the U.S. Food and Drug Administration (FDA) voted unanimously last week in support of boosters for Moderna's (MRNA -1.76%) COVID-19 vaccine and for Johnson & Johnson's (JNJ -0.56%) vaccine. The FDA has already granted Emergency Use Authorization (EUA) to boosters for the COVID-19 vaccine marketed by Pfizer (PFE -0.63%) and its partner BioNTech (BNTX -1.62%).

Granted, the FDA doesn't have to go along with the recommendations from the advisory committee. It seems likely, though, that the agency will do so.

Authorizations for boosters is good news for all of these leading COVID-19 vaccine makers. But Johnson & Johnson appears poised to be the bigger winner with boosters than either Moderna or Pfizer.

A healthcare professional giving a shot to a person.

Image source: Getty Images.

No restrictions

Pfizer's EUA for boosters came with several restrictions. The FDA decided that boosters would be allowed only for individuals ages 65 and older and for individuals ages 18 through 64 who are at high risk for developing severe COVID-19 or who work in environments that could put them at high risk of severe complications from COVID-19.

The FDA advisory committee's vote for Moderna boosters mirrored the restrictions for the Pfizer-BioNTech vaccine. Assuming the FDA follows that recommendation, Moderna's market opportunity for booster doses will be just as limited as that of Pfizer and BioNTech.

However, the FDA panel placed no such restrictions on boosters for Johnson & Johnson's COVID-19 vaccine. Again, assuming the FDA goes along with the committee's recommendation, J&J's booster will be available to adults ages 18 and older at least two months after they received the first shot of the J&J vaccine. 

The Moderna and Pfizer-BioNTech vaccines require two initial doses whereas Johnson & Johnson's vaccine initially requires only a single dose. J&J's vaccine also provided lower efficacy than its rival messenger RNA (mRNA) vaccines. These factors heavily influenced the FDA advisory committee's decision to recommend broader use of boosters with the J&J vaccine.  

Winning is relative

The demand for Johnson & Johnson boosters should be much greater as a percentage of initial vaccinations than it will be for Moderna and Pfizer-BioNTech boosters. From that standpoint, J&J will almost certainly be a bigger winner with booster shots than its rivals.

However, the term "winning" is relative in this case. Johnson & Johnson has committed to selling its COVID-19 vaccine at cost during the pandemic. Boosters won't add a dime to the healthcare giant's profits over the near term.

Also, only around 23.7 million doses of Johnson & Johnson's single-shot vaccine have been given in the U.S., according to the Centers for Disease Control & Prevention (CDC). By comparison, the total doses administered stands at 192.8 million for Moderna's vaccine and 278.1 million doses for the Pfizer-BioNTech vaccine. Even without the restrictions imposed on boosters for rival mRNA vaccines, the pool for J&J boosters is much smaller.

Perhaps the most important thing to understand is that EUAs for boosters isn't likely to lead to higher sales for any of these vaccine makers over the short term. The U.S. government has already ordered more than enough doses of all three vaccines to provide boosters to everyone who has already been fully vaccinated plus meet the needs for the remaining Americans who haven't been vaccinated. 

A different long-term picture

There could be a much different picture over the long term. Europe has already recommended boosters for the Pfizer-BioNTech vaccine without the restrictions adopted in the U.S. It's possible that the U.S. could follow in Europe's footsteps in the not-too-distant future with the Pfizer and Moderna vaccines.

As a result, boosters could eventually provide solid catalysts for mRNA vaccine stocks. There is some uncertainty about recurring revenue from COVID-19 vaccines after the pandemic is over. If there is a clear need for boosters at least on an annual basis, the leading vaccine makers should be able to count on strong sales continuing for years.

However, the long-term dynamics could make it less likely that Johnson & Johnson keeps up its winning ways. Moderna and the Pfizer-BioNTech team appear to be ahead of J&J in developing new vaccine versions that target emerging coronavirus variants. The flexibility of these companies' mRNA technology could provide significant advantages in responding rapidly to new viral threats.

Johnson & Johnson undoubtedly wants to be a major player in the COVID-19 vaccine market for years to come. And perhaps it will. The good news for the company and its shareholders is that it doesn't have to win in COVID-19 to still be successful overall.  

Keith Speights owns shares of Pfizer. The Motley Fool recommends Johnson & Johnson and Moderna Inc. The Motley Fool has a disclosure policy.

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