An investor’s guide to Covid-19 vaccines and the post-covid clinical world

Covid-19 vaccines are emerging; there are said to be over 200 possible vaccines under development, what can investors do? And what lessons can we learn for investing in health-related areas?

Article updated: 25 November 2020 2:00pm Author: Michael Baxter

Not so long ago, a small US vaccine maker called Novavax was clinging on to dear life. Shares had fallen by roughly 98 per cent in five years, market cap had plummeted to around US$60 million, from over US$10 billion in 2015. Wise heads nodded in understanding— another example of the dangers of hype. Then, on January 10th this year, in China, the genome of a certain Novel Coronavirus was sequenced. That was a Monday. By Thursday of that week, Gregory Glenn, the man in charge of R&D at Novavax, had arranged for the ordering of the gene for the virus’s spike protein. 

Today, the Novavax potential vaccine for Covid-19 is one the more promising candidates. At one point, shares were up 400-fold from the January nadir. Shares have fallen back since, with the news of vaccines from Pfizer, Moderna and Oxford University/AstraZeneca. But I am not sure the significance of what has happened at Novavax is fully understood. As Gregory Glenn says in this interview, the company now has “a great biotech vaccine structure that didn’t exist...we have been working on a much-improved flu vaccine, but to get it commercialised we didn’t have the scale. Now we will.”

Furthermore, as I am sure you realise, rolling out the vaccine across this planet will be an incredibly tough challenge. There won’t be one vaccine — there will be many. Some will have greater efficacy; some will be cheaper to manufacture; some will be cheaper to distribute. Some might turn out to be more effective in certain demographic groups. The potential permutations and combinations are enormous.

And indeed, as I pointed out here the other day, the logistics challenge will be extraordinarily complicated — which is why the likes of FedEx and UPS may do well from the vaccine rollout. 

The Novavax vaccine may or may not be taken forward, but for the markets to sell shares in the company because a few other pharmaceutical companies got their first, shows enormous naivety. There is no reason to believe that one of the first vaccines will also prove to be one of the most effective.

Vaccine types

Roughly speaking, Covid vaccines fall into four categories:

  • There are the mRNA vaccines such as the drugs developed by Moderna and Pfizer/BioNTech; these typically involve the RNA causing the immune system to produce protective antibodies.
  • Protein subunit vaccines such as the Novavax vaccine – a vaccine from Sanofi/GlaxoSmithKline also falls into this category.
  • Weakened adenovirus vaccines. Such vaccines have taken an adenovirus which exists naturally, the most famous example being an adenovirus that causes colds in chimpanzees, and manipulate them genetically to make them less severe. Examples of adenovirus vaccines include vaccines from Oxford University/Astra Zeneca, the Russian Sputnik V and another under development from Johnson and Johnson.
  • Inactivated vaccines which includes several vaccines under development in China and Covaxin from India.

Profitability of vaccines

AstraZeneca says that it will not make a profit from its vaccine; this may seem puzzling, because there has been a lot of interest in the company’s shares.

There are two critical points to bear in mind. Developing a drug is expensive, both directly and indirectly. I say indirectly because the road to a successful drug is littered with drugs that were scrapped. To what extent can a company say it is not making a profit from a drug, but simultaneously build into the drug’s price all the indirect costs?

Secondly, the expertise that is acquired through developing the Covid vaccine will be transferable.

The value of learning and infrastructure 

This brings me back to the comments by Gregory Glenn. Okay, Novavax is tiny compared to the likes of AstraZeneca, Pfizer, GSK and Johnson and Johnson, but his comments are still valid. Covid-19 has created the funding and urgency to experiment and hone expertise in areas making use of cutting edge technology. All companies that have participated in this process will have gained enormous knowledge. 

And the extraordinary speed with which viruses have been developed is testament to the power of new technologies. People who argued it would take years to develop a vaccine overlooked two things. They overlooked the importance of necessity in giving birth to invention. And they overlooked the extraordinary advances in technology seen this century.

As Gregory Glenn said: “What’s happening today wouldn’t have been possible ten years ago.”


Covid-19 is not a once in a hundred years virus. It was the first virus of this magnitude in one hundred years, but the twin pressures of climate change and overpopulation in some regions is creating the risk of many more viruses.

But even the above view is wrong, and Covid-19 proves to be an unusual episode in recent human history, the fact that so many vaccines were developed so quickly shows what modern technology can do.

I expect that the research that was promoted by Covid will have multiple uses. 

Pharmaceutical companies are about to enter a period of opportunity. New technology provides the tantalising promise of cures and vaccines for conditions currently considered incurable. 

I think now is a good time for investment in healthcare, health tech and pharmaceuticals. 

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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