Shares of global pharmaceutical companies took a hit on Wednesday after the Biden administration said it would support waiving intellectual property rights for COVID-19 vaccines in order to help infection-ridden, poorer countries speed up vaccination and get the pandemic under control.
Lifting patent protection means rival drugmakers would be able to manufacture shots using “recipes” that cost vaccine makers billions of dollars to develop without any legal consequence. Advocates believe this approach will dramatically increase vaccine supply to countries that need it the most.
Needless to say, vaccine makers don’t like the idea. However, their fear is not just financial—in fact, some COVID-19 vaccine makers don’t see any negative impact on their business due to IP waivers. A bigger concern, they said, is that the method likely won’t work.
In an interview with The Wall Street Journal Tuesday, Pfizer CEO Albert Bourla said waiving patent protection “is so wrong,” adding that sharing its vaccine recipes with other pharma companies would not increase production.
His view is echoed by the CEO of Moderna, which makes a very similar COVID-19 vaccine to Pfizer based on a novel technology called messenger RNA (mRNA).
“I didn’t lose a minute of sleep over the news during the night,” Moderna CEO Stéphane Bancel told analysts during the company’s first-quarter earnings call Thursday.
Bancel is perfectly confident in Moderna’s proprietary expertise in the mRNA technology. “We have been working on this for years…This is a new technology. You cannot go hire people who know how to make mRNA,” he said. “Those people don’t exist…They will have to go run a clinical trial, get the data, get the product approved and scale manufacturing. This does not happen in 6 or 12 or 18 months.”
Bancel said he believes countries around the world would continue buying its COVID-19 vaccine for years even if its patents are waived.
The Pharmaceutical Research and Manufacturers of America (PhRMA), the pharma industry’s main trade group based in D.C., also opposes to lifting patent protection.”This decision does nothing to address the real challenges to getting more shots in arms, including last-mile distribution and limited availability of raw materials,” PhRMA said in a statement Thursday.
“It’s an empty promise,” PhRMA CEO Stephen Ubl said on Fox Business Friday. “[Drugmakers in poor countries] are not going to have the manufacturing capacity to actually manufacture the technology or the vaccines, but they are going to compete with our companies who can for scarce inputs. So they’re likely to make it harder…to ramp up supply.”
Despite sliding stock prices, Wall Street analysts in general aren’t too worried about the financial impact on COVID-19 vaccine makers due to the Biden administration’s decision.
“While this is a negative headline,” Morgan Stanley analysts said in a research note, there is no mechanism “to force management to teach other manufacturers how to make their vaccine, suggesting no change to the status quo.”
“The bottleneck is neither access nor patents (or price) but simply that there aren’t enough vials, raw materials, etc. to manufacture it regardless of patents,” Jefferies analyst Michael Yee said in a note to investors.