Vaccine Rollout, Herd Immunity to End Pandemic

COVID will create a US$ 39bn vaccine and treatment market and usher in immunity by 2023, writes Morningstar's Karen Andersen.

Karen Andersen, CFA 12 January, 2021 | 12:07PM
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COVID-19 Vaccine

Following a year with more than 83 million reported cases and 1.8 million reported deaths globally due to COVID-19, 2021 begins as two newly authorised vaccines are distributed to high-priority populations in the US and Europe.

These mRNA vaccines, from Pfizer/BioNTech and Moderna, have set a high bar for efficacy and safety, and they appear poised to ramp up supply and dominate the U.S. market throughout the first half of the year, supporting a foundation for herd immunity in the US by midyear. With additional support from Johnson & Johnson, Novavax, AstraZeneca, and China and Russia vaccine programs, global herd immunity looks achievable by 2023.

Despite significant vaccine and treatment sales potential in 2021, the uncertain market duration prevents significant impact on our discounted cash flow-based fair value estimates. That said, several biopharma firms with COVID-19 treatments (Gilead, Roche, Glaxo, and Merck) look undervalued, based on strong potential for their core businesses. COVID-19 vaccine firms are generally fairly or overvalued, although AstraZeneca and Pfizer trade at slight discounts to their fair value estimates.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
AstraZeneca PLC ADR54.38 USD1.06Rating
BioNTech SE ADR202.35 USD10.15
Eli Lilly and Co194.76 USD-0.34Rating
GlaxoSmithKline Pharmaceuticals Ltd1,475.75 INR1.65
Johnson & Johnson170.27 USD1.05Rating
Merck & Co Inc78.17 USD-0.31Rating
Moderna Inc158.55 USD-2.82Rating
Novavax Inc160.50 USD-8.81
Pfizer Ltd Shs Dematerialised5,403.90 INR0.25
Roche Holding AG ADR41.58 USD-1.31Rating

About Author

Karen Andersen, CFA

Karen Andersen, CFA  Karen Andersen, CFA, is a healthcare strategist for Morningstar.

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