When coronavirus vaccines first hit the market, countries couldn't get enough of them to meet demand. In some instances, people had to wait months before winning an appointment for a shot. Today, in many countries, the situation has changed completely. Vaccine doses from leaders Moderna (MRNA 0.62%) and Pfizer are readily available.
In fact, they might be a bit too available. Switzerland said late last month that it was set to destroy about 600,000 doses of Moderna's vaccine because they have expired. Like all medication, vaccines have an expiration date. And using them after that date means they might not be as effective.
Moderna depends on its coronavirus vaccine for revenue, so any sign of weakening demand is worth watching. Does this latest news out of Switzerland mean trouble for the vaccine maker? Let's find out.
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Wasted doses in the U.S.
Switzerland's action isn't the first clue that vaccination coverage might be nearing a maximum in some areas. The national rate of wasted doses in the U.S. was 9.5% of the 687 million doses delivered as of the end of February, according to an Associated Press report.
Vaccine waste isn't always due to people not wanting vaccination. In certain cases, vials break or are stored at the wrong temperature, for example. But in many cases, doses have gone to waste due to a drop in demand. In March, the Kaiser Family Foundation said the U.S. was at the point where supply was about to start surpassing demand.
OK, so now this situation probably sounds even worse for Moderna, right? It's true that future demand might not replicate what we saw during the initial vaccine rollout. At that time, everyone who wanted to get a vaccine needed one. Now, most of those people have gone for their primary series, and in many cases, they've even gone for boosters.
But this moment of excess supply isn't necessarily bad news for Moderna. Experts say the coronavirus won't just disappear. They predict the pandemic will shift to an endemic situation. That's when the virus sticks around but we won't see extreme peaks in infection rates. But this does mean that at least the most vulnerable individuals will require protection. Moderna and Pfizer both have said the future of coronavirus prevention is an annual booster, much like the flu shot.
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Key Data Points
The need for a booster
So today, we're seeing a drop in demand because many individuals got their vaccines and boosters around the same time. Most people who wanted them are all set -- for the moment. But at a certain point, these individuals will need an annual booster. Right now, Moderna is aiming to get that rolling this fall. Again, like the flu, the idea is that the coronavirus also will pick up speed again in the fall and winter.
Moderna is testing a booster candidate right now that targets the original coronavirus strain and the omicron variant. The Food and Drug Administration (FDA) is meeting this month to discuss whether updating shots to address omicron should be done in the fall. If the FDA approves an update, Moderna hopes to bring its candidate to market. If the FDA doesn't vote for an update, companies will continue to sell current boosters. In both cases, we're likely to see a wave of vaccination demand for boosters in the fall.
The situation in developing nations
It's important to remember that demand still exceeds supply in some parts of the world: in developing nations. Only 1% of vaccine doses worldwide have been administered in low-income countries, the United Nations said in late March. Companies sell vaccine doses to these countries at lower prices. But this still represents some revenue. And over time, revenue gains can be made through order volume.
And lastly, it's important to note that Moderna eventually might shift to selling its vaccine directly to distributors instead of selling to governments. Even if demand shrinks, Moderna will gain on pricing. The company has said it would lift the price of its vaccine at that time.
Yes, the destruction of vaccine doses is bad news in general. It's wasteful, particularly since people in some countries still are waiting for a shot. But this destruction of doses doesn't mean trouble for Moderna or other vaccine makers. Demand for their products should pick up in the fall. And that could set the revenue pattern for the coming years.
