As Covid-19 vaccines begin to receive emergency approvals, the race begins to distribute the one product billions of people around the world will want. That is creating investment opportunities as traders examine the companies involved in the global launch.
With multiple types of vaccines, supply chains involve hundreds of companies, from airlines to manufacturers of freezers, vials and disposable needles, and thousands of employees working to get injections from laboratories to the arms of populations around the world. .
The world has never seen a distribution puzzle of this type: it has been called “the largest and most complex logistics exercise in history.” Each of the vaccines approaching approval presents different challenges, from the ultracold chain required for the Pfizer Inc. and BioNTech SE vaccine to the more mundane but equally challenging difficulties in sourcing vaccines like AstraZeneca Plc’s across the developing world. Here are some of the sectors and companies targeted by marketers for their roles in the global vaccine launch:
All vaccine candidates require some degree of cooling, and the Pfizer injection should be stored at around minus 70 degrees Celsius (minus 94 degrees Fahrenheit).
That “will be demanding but not insurmountable in developed markets,” analysts at HSBC Holdings Plc wrote in a report last month. “The provision of cold storage facilities will be critical factors.”
That has made freezers one of the best bets. In South Korea, freezer makers Daihan Scientific Co. and IlShinbiobase Co. are up more than 350% this year, increasing on Tuesday after the government announced it had secured 44 million doses. Japanese consumer electronics and freezer box maker Twinbird Corp. has soared more than 300% this year, while in India, Snowman Logistics Ltd. is up 52%.
Germany’s Va-Q-tec AG has risen 195% in 2020 amid a deal to provide insulated containers for vaccines for a “leading global manufacturer of pharmaceuticals” it did not identify.
In the United States, Trane Technologies Inc. is up 36% this year, while Carrier Global Corp. has more than tripled since listing on the New York Stock Exchange in March. The two are “well positioned to benefit from vaccine-driven cold chain demand,” wrote a team of analysts from Citigroup Inc. on December 3.
It’s not just about keeping them cool – moving the jacks is a huge task too. FedEx Corp. and United Parcel Service Inc. are adding refrigerated trucks and facilities, though the two are already struggling to keep up with a surge in demand for deliveries and it is not yet clear how long these cold chains will take.
HSBC also expects Turkish Airlines, Air France-KLM, Deutsche Lufthansa AG and Gulf airlines to be “highly involved” in the distribution chain, maintaining an already thriving cargo business, but cautioned that it would not be enough to overcome losses from passengers in the troubled airline business.
Getting the vaccine in the last mile could also boost demand from truck makers Paccar Inc., Navistar International Corp. and CNH Industrial NV, as well as engine supplier Cummins Inc., analysts at UBS Group AG wrote.
US pharmacy chains, including CVS Health Corp. and Walgreens Boots Alliance Inc., are expected to benefit from partnerships with the government to administer vaccines. Both stocks are up more than 20% since the deal was announced on October 30. Morgan Stanley sees an $ 8.5 billion sales opportunity for distributors and suppliers.
Among US drug brokers, McKesson Corp. is likely to see the biggest boost to earnings as the top distributor for most injections. Analysts at JPMorgan Chase & Co. have singled out rivals AmerisourceBergen Corp. and Cardinal Health Inc. among companies that could provide support.
And a population to consider for all types of vaccines is the German Gerresheimer AG. The maker of specialty glass and plastic products, including vials, is up 33% this year.
Pfizer / BioNTech
The Pfizer and BioNTech vaccine was the first to report positive data from a late-stage clinical trial. The UK has already started to implement it and the US granted an emergency use authorization on Friday night. Pfizer has risen more than 20% since the end of October, while BioNTech has added almost 50%.
Despite the complications of the cold chain, Pfizer has the advantage of being the first to move, which is helping to elevate its partners. Croda International Plc reached a record after an agreement to supply Pfizer with the new excipients used to make its vaccine, while Indian specialty chemical manufacturers supplying Pfizer, including Aarti Industries Ltd. and Suven Life Sciences Ltd., have increased.
Using the same messenger RNA technology as Pfizer, Moderna Inc. outperformed its rival with an equally effective one that can be stored at regular refrigerated temperatures. An advisory panel from the US Food and Drug Administration will discuss Moderna’s opportunity at a meeting on December 17.
A key action to watch out for is Moderna’s production partner, Lonza Group AG. The shares are up more than 50% in 2020.
While the vaccine developed by AstraZeneca and the University of Oxford is based on more familiar technology, confusion over the test results means it is headed for additional global testing.
But the Astra vaccine will continue to be closely watched, as it is expected to meet demand from low- and middle-income countries. Oxford Biomedica Plc will become the manufacturing partner, with shares up 35% in 2020.
As the launch begins, there may still be a lot of swings in stock prices. With millions of people injected, how will markets react to reports of illness or death among those who have received the vaccine, even without a link to the injection?
With unknowns like the length of immunity for these vaccines, it is unclear whether it will be a one-time job or an annual injection, and thus whether it is a temporary increase in profits or an ongoing profit for companies involved.
And there are more vaccines to come, from Sinopharm, Johnson & Johnson and others from China, that may open up more avenues for investment.
(With help from Bailey Lipschultz, Abhishek Vishnoi, Heejin Kim, Ronojoy Mazumdar, and Chiara Remondini).