The epidemic continues and the world is rushing to buy vaccines. Readers may think that the stock price of vaccine manufacturers must soar. Let’s take a look at the figures: Compared with the stock price a year ago, Pfizer has risen by less than 2%; Johnson & Johnson is about 15%; Aspen Likang fell 7%. Some small pharmaceutical companies performed better, and Pfizer’s partner BioNTech’s stock price rose 1.5 times.
The Economist, published on May 15th, analyzes the rate of return on R&D by US pharmaceutical companies. From the 10% level ten years ago, to the level of 2% today, which is lower than the 7% cost of capital (WACC), will the new crown virus change this situation? Mainly depends on whether the vaccine price can be maintained? And whether there will be more competitors in the market.
So far, the government is the main buyer of vaccines. There is a climate of hatred for business all over the world, and it is estimated that pharmaceutical companies will not be too presumptuous when setting prices. The BBC earlier compared the median prices of different vaccines: Moderna was the most expensive at about 31 yuan per dose (USD. The same below); followed by Kexing at 22 yuan; Pfizer/BioNTech at 19 yuan, the most expensive The cheap AstraZeneca is 6 yuan. The above price is based on the purchase price of the US government and does not represent the negotiation cost of other countries.
From commodity to political product
The price difference reflects the scale effect produced by the amount of capital invested by the pharmaceutical company, and it is also related to who pays for the research and development. AstraZeneca is a vaccine developed by the University of Newton, with a total investment of 11.6 billion, of which about a quarter is sponsored by the government and non-profit organizations. This is why the price of AstraZeneca vaccine is much cheaper than the counterpart. The investment of other pharmaceutical companies is much lower than that of AstraZeneca. Pfizer, which ranks second, has invested 3.2 billion, which is equivalent to less than 30% of AstraZeneca’s.
The development time of the new coronavirus vaccine is so short that it has created human history. But this does not mean that the development capabilities of global pharmaceutical companies have reached the top. In the past, in commerce, pharmaceutical companies were far less interested in developing some acute diseases, especially drugs mainly sold to poor countries, than in supplying chronic diseases to the population of rich countries. However, due to the relationship between the drug’s power and the variety of the new coronary pneumonia, it is estimated that the people will be injected with vaccines every year, which makes the attractiveness of this business soaring.
The United States is promoting lower patent restrictions to Europe, and the initial response is cold. However, regardless of whether the rent-seeking activities of pharmaceutical companies through patents can continue, I think this fat will be more and more disputed by pharmaceutical companies.
Unfortunately, vaccines are no longer a commodity today. Large countries use the supply and approval of vaccines to overwhelm their opponents. If they are not done well, it will aggravate the hatred between rich and poor countries. I hope that the leaders of the great powers will think about the people of the earth and let go of their personal ambitions and desire for power.
Senior Partner and President of Asia Pacific