Early on in the pandemic, Moderna and Pfizer beat smaller rival Novavax (NVAX +3.64%) to market with their coronavirus vaccines by a year or more in some countries. This head start offered them the lion's share of the market and revenue, and Novavax couldn't catch up.
As we head into a new vaccination season, Moderna and Pfizer once again reached commercialization first with their updated coronavirus vaccines. But this time, Novavax is only a few weeks behind -- and may have a better chance of gaining market share. In fact, this could be Novavax's big opportunity to prove its value in the world of coronavirus prevention -- and a key step to recurring vaccine revenue.
Updated coronavirus vaccines
Moderna and Pfizer scored a nod from the U.S. Food and Drug Administration for their updated vaccines in early September, and just this week Novavax earned an OK from the agency. So Moderna and Pfizer were able to start vaccinating about three weeks ahead of the smaller biotech company.
But Novavax may have more of a chance to gain market share now than it did in the first round of vaccinations. That's because the entire vaccine landscape is changing. Today, companies aren't just selling doses to governments. Instead, they are shifting to a commercial model, which involves selling doses directly to healthcare providers.
For vaccine makers, serving a greater number of clients in many more locations has slowed down the logistics of getting doses to their destinations. As a result, demand has surpassed supply in certain areas, and some pharmacies are even prioritizing the most at-risk people first.
So far, about 2 million Americans have received updated coronavirus shots, CNBC reported, and about half of Americans are interested in getting a shot, a Reuters poll shows. This means Novavax clearly could carve out market share if it is able to rapidly deliver promised doses to customers.
I wouldn't expect Novavax to sell nearly as many as leaders Pfizer and Moderna, since these players launched their updated vaccines first and sell dominant brands that healthcare providers have widely used in the past. But that's OK. This still could be Novavax's big opportunity to progressively establish itself.
NASDAQ: NVAX
Key Data Points
The path to recurring revenue
Now here's why this is important. We're no longer talking about selling a vaccine once in a pandemic situation. The coronavirus is here to stay, health experts say, and that means vaccine makers could sell vaccines annually -- much like they do for the flu. And that equals recurring revenue, a very positive addition to any company's earnings picture.
What's more, a greater presence in the vaccine marketplace now may help Novavax excel later with a potential combined flu/coronavirus vaccine product.
Novavax, Moderna, and Pfizer all are working on combined candidates, but if the coronavirus vaccine market indeed mimics that of the flu, demand for such a product could be high -- and enough for all three companies to generate significant revenue annually.
What does all of this mean for investors? Well, it's important to keep an eye on Novavax's progress this vaccine season to see if it's able to make gains in the market and ensure deliveries to customers. If you're a cautious investor, Novavax still shouldn't move from your watch list to your buy list until we have more visibility on these points.
But if you're an aggressive investor, you may want to take the chance that the second time will be the charm for Novavax and scoop up a few shares. It's unlikely this biotech company will come close to the sales levels of its bigger rivals, but it still could reap long-term rewards from its vaccine innovation in the coronavirus and flu markets. And, if that happens, investors who get in early on the shares may win big.
