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Vaccine Stocks May Be Overvalued Due To The Coming Vaccine Glut

Jan. 13, 2021 3:35 PM ETCVAC, NVAX, PFE, MRNA34 Comments
Thomas Kirchner profile picture
Thomas Kirchner


  • Production capacity is built for billions of doses of vaccines.
  • Vaccines are priced for high income countries but unaffordable for poorer countries.
  • Vaccine manufacturers may be less profitable than stock prices imply.

Stocks of the developers of corona vaccines have been among last year's top performers. Moderna (MRNA), for example, at its peak in early December had jumped as much as 800% and added a stunning $50bn in market capitalization. Similarly. Pfizer (PFE) added about $40 bn, while its partner BioNTech (BNTX) added $22 bn in market value [i]. And these are not the only vaccine companies around. The announced total production capacity of all manufacturers for 2021 is now in the billions of doses. While it is great for anyone who wants to get vaccinated that there is so much vaccine production capacity and so much competition, the flipside of competition is always an erosion of profitability. With many billions at stake, it is time for investors to do some basic math on capacity, pricing and future prospects for profitability.

Enough doses for everyone

In the table below, we list different vaccines along with their production guidance for 2021 and pricing. We believe that the vaccines approved in different jurisdictions around the world so far, and the associated production capacities, will be sufficient to inoculate 2.5 billion people by the end of 2021. If only three additional vaccines (J&J (JNJ), Novavax (NVAX), and the Oxford vaccine) are approved, then production capacity will be sufficient to vaccinate at least 5.5 billion people by the end of the year. However, the actual number is likely to be even higher because Chinese and Russian vaccines are expected to be manufactured under local licenses in many developing countries.

India, for example, has a thriving generics industry and is particularly strong in manufacturing vaccines for its population of 1.3 billion people. So far, Indian licenses for only 300 million doses of the Sputnik V vaccine have been announced publicly. We expect the production in India to significantly exceed this

This article was written by

Thomas Kirchner profile picture
Thomas Kirchner manages the Camelot Event-Driven Fund (EVDIX) and is the author of "Merger Arbitrage: How to Profit from Global Event-Driven Arbitrage. 2nd Edition, Wiley Finance, 2016"

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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