Pfizer’s Covid-19 vaccine has brought a new hope not only to the markets, but all of us. But the investment opportunity with a Covid-19 vaccine is complicated and can be summed up with one word.
The one word that sums up the investment opportunity created by Covid vaccines
Markets went and bought on the news that the Pfizer vaccine for Covid-19 is 90 per cent effective. Shares in Pfizer did pretty well too, although maybe not as well as one might have expected. But to spot the real investment opportunity, look at the detail. In particular, consider one word.
Let, me put you out of your misery; the word is logistics.
It is indeed wonderful news about the vaccine, but getting it out there will be an enormous challenge.
Manufacturing the vaccine in sufficient doses will be an enormous challenge. Getting from the point of manufacture to the recipients will be a task that by any normal circumstances, we would call monumental. But keeping the vaccine at the desired temperature, minus 75 degrees, will be the biggest challenge of the lot.
As I understand it, minus 75 degrees isn’t even an approximate temperature. The temperature window around this point is narrow. A few degrees warmer, a few degrees colder, and that’s it, ruined.
Because of this temperature requirement, the Pfizer vaccine will probably be very expensive, and unaffordable in poorer parts of the world. Even in the West, the cost of the vaccine will be a mitigating factor.
So don’t think, ‘Pfizer has won, all the other pharmaceutical companies are out of the race.’
In fact, I understand that the AstraZeneca/Oxford vaccine along with the vaccine being developed by Johnson and Johnson will only need to be kept at between two and eight degrees. This more modest temperature requirement may make them more viable.
But the investment opportunity is not just about the pharmaceutical companies that make the vaccine.
To create herd immunity, the vaccine has to be administered to 60 to 70 per cent of the population.
How do you possibly get any vaccine to between 60 and 70 per cent of everyone? That’s more than four billion people — worldwide. (And ignores the possibility it may have to be readministered a year later.
Apart from anything else, there will be an educational challenge — how do you convince a sufficient number of people to take the vaccine? How do you respond to the anti-vaccine lobby?
But the physical logistics of transporting the vaccine from A to B and keeping it at the right temperature will be the biggest challenge of the lot.
So who will be responsible for logistics? It will involve many parties, but I guess UPS and FedEx will be in the vanguard. I think that vaccine logistics will represent the biggest and most important challenge in the history of the two companies. I am somewhat surprised that shares in the two companies have not shot up.
Triumph of technology — gainsaying the naysayers
By the way, on a different note, I think there is another lesson here concerning modern technology.
Not only is the speed with which a vaccine has been developed extraordinary, it totally gainsays the naysayers. The people who cynically proclaimed that it would take years to develop a vaccine, if indeed it would ever be developed, were wrong. They failed to grasp how technology has changed, they were unable to grasp how powerful necessity can be and they failed to grasp the importance of modern media, i.e. the Internet, in supporting global communication.
I think there is a lesson here concerning climate change. Once we accept the necessity of defeating it, we will develop the technologies to make that possible. At the moment, we accept climate change, in much the same way we accepted that there was this Coronavirus thing back in January. But it took disaster building upon disaster before the necessity for a vaccine sunk in.
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.