Gilead Sciences Warns Against Racing to Develop & Profit from COVID Vaccine

By: Tristan Halloway

 

The hunt for a promising vaccine for the COVID-19 pandemic continues.  Scores of drug makers around the globe are racing to develop and test vaccine options.  There is no doubt that the pharmaceuticals all share a hope for lucrative financial profits.

 

The past few weeks have been filled with news of different drug makers making progress in their quest for a breakthrough.  Trials are ongoing– first on animals then on humans in different stages.

 

As the Wall Street Journal reported, producing a vaccine requires significant funding.  After success in all the trials, the next step would entail the upfront purchase of hundreds of millions of doses of the vaccines.  Investment companies have displayed their interest in the potential profits, gambling on pharmaceutical stocks since the start of the pandemic.  So much so that a wide ranging index of bio-tech stocks saw the average value of the companies jumped roughly 65 percent in April, compared to March.  It was the vaccine makers’ value that led to the exponential increase in the stock prices in just one month.

 

As reported by WSJ, despite all the positive news, there are many reasons for caution.  First, bio-tech companies are infamous for losing value in an instant, even when things don’t go really wrong.  The most compelling reason for this is that most of the drug candidates won’t ever actually hit the market, at no fault of their own.  Next, the prices for the drugs may not end up being as high as drug makers hope.

 

Also, the expected prices for these drugs have already been calculated into the stock prices, creating a vulnerable variable which can very easily rock the value of the stocks. Pfizer and partner BioNTech, which didn’t take government research funding, received a contract for 100,000,000 doses for a total price of $1.95 billion.  That comes out to roughly $39 per a two-dose treatment.  That first round of doses has already been worked into the stock prices.  Companies that anticipate charging a higher price over the long run, will need to meet very rigorous safety and efficacy standards, especially if they used public funds in the first place.

 

Gilead Sciences, the maker of a drug named Remdesivir, which it was hopeful to use as an antiviral COVID-19 treatment, is a perfect example of the dire risks bio-tech companies face.  Gilead’s stock price jumped 25 percent in April, compared to March.  Since then, however, the stock price is back to where it began.  This is despite the steady progress their drug has made in being approved for emergency use.  Gilead had donated its initial supply and started selling more over the summer, now boasting an increase in the company’s expected profit per share.