Comic: Vaccines, Assemble!

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Comic: Vaccines, Assemble!

By Geoffrey Smith -- The pharmaceutical industry has had its fair share of critics in recent years. Sky-high drug prices have produced generous shareholder returns, and muscular litigation to avoid liability when its drugs go wrong have protected those payouts, to the annoyance of many of an aggrieved patient and regulator.

So the pharma industry has a lot to thank Covid-19 for: the virus has reminded the world just what it gets in return for all those tax and health insurance dollars. But that is nothing next to what the world owes the pharma industry right now. For protection against a fatal or debilitating disease is the one thing that billions of people desperately want to restore their lives to something as close to the normality of a year ago as possible.

Among the various subsets of humanity, investors have more reason to be pleased than most. The MSCI World equity index rose 21% in the two months following the announcement by Pfizer (NYSE: PFE ) and BioNTech (NASDAQ: BNTX ) that their vaccine was over 90% effective in treating the disease. That was quickly followed by authorization from the U.S. Food and Drug Administration and other regulators worldwide.

The International Monetary Fund recently revised up its forecast for world growth this year, emboldened by the progress of various drugs through the authorization process around the world. The U.S. Congressional Budget Office now expects U.S. GDP to rebound further and faster than it previously expected, in part because it expects public confidence to return more quickly and completely.

Where Pfizer and BioNTech have led, others have followed. No-one, however, has yet bettered the 93%+ efficacy of the Pfizer-BioNTech and Moderna (NASDAQ: MRNA ) vaccines. The similarity of the results for those two has raised hopes for another mRNA vaccine, developed by German-based CureVac (F: 5CV ), which started stage III trials in December.

But one of the most conspicuous successes of the industry has been its ability to develop effective treatments through a variety of technologies. Vaccines developed by AstraZeneca (NASDAQ: AZN ), Johnson & Johnson (NYSE: JNJ ), Novavax (NASDAQ: NVAX ) and the Russian pharma industry all work in different ways, but all show high levels of efficacy.

That’s important because of the large number of new strains of the virus that have already emerged and will continue to emerge from the original SARS-Cov-2 virus. South Africa was forced to halt its rollout of the AstraZeneca/Oxford University drug because of its low effectiveness against one particularly nasty new strain.

But having several technologies at work raises the likelihood that at least one of them will be equal to any new mutation, and the more vaccines are approved, the less acute will be the production bottlenecks such as the one that caused a bitter feud between the EU and U.K. recently over who gets their vaccine order filled first.

Technologically and commercially, the vaccine campaign has been a triumph for the U.S. model of freewheeling biotech startups – with Moderna and Novavax succeeding where the storied research institutes and pharma blue chips of Europe have mostly come up short. AstraZeneca’s success contrast sharply with the failure of Sanofi (PA: SASY ) (NASDAQ: SNY ) and GlaxoSmithKline (NYSE: GSK ). But it has also thrown up unlikely winners such as Russia’s Sputnik vaccine, a single-shot drug with a 91% efficacy rate that has transformed the shaky international reputation of Russia’s life sciences industry.

The vaccination campaign is also offering some governments a shot at redemption after their – in some cases spectacular – mismanagement of the pandemic. In the U.K. in particular, the quick rollout of vaccines promises to reopen the U.K. economy by summer, while much of continental Europe lags three months behind. That is already being demonstrated in the foreign exchange markets and will ultimately be reflected in the data.

But even where vaccination takes place more slowly, the global campaign looks like being a triumph of human achievement: one that will allow the world to bounce back within a year or so from a disaster that could have crippled the global economy for a decade. Victory over Covid now looks like a question of ‘when’, rather than ‘if’.

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