Vaccine Investment
Vaccine-related corporate revenue, investor investments are soaring and set to balloon even further Image Credit: Seyyed de la Llata

Dubai: Looking to invest your hard-earned money and bet on the next major money wave, while gaining enough to help ride out the current dire pandemic-related cash tightened setting? Research and investors reveal vaccine-related company stocks as an ongoing and upcoming big investment theme.

Clarity has emerged that multiple COVID-19 vaccines will be ready for distribution in the coming months and more approved vaccines mean more companies that are currently investing millions in making them are set to benefit from a major revenue boost – making it an ideal investment opportunity for individual investors.

With at least 75 per cent of the global population, which currently stands at 7.8 billion, in need of a vaccine, the companies making them are in for billions in revenue boost. And when companies make fortunes, their investors can too.

More money still going into vaccine makers

Globally, venture capital (VC) funding into life science companies boomed in the last few months, with the US and Germany having been largest recipients of venture capital (VC) investment into vaccine companies this year, research from UK-based investment consultant Savills revealed.

What is venture capital?
Venture capital is a form of financing that is provided by venture capital firms or funds to start-ups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.

The research further shows the extent to which VC funding into such companies boomed to $2.3 billion (Dh8.5 billion) by the end of August this year, comprising 1.2 per cent of all global VC investment, up from an annual average of just 0.6 per cent over the past five years. This is due to a surge in research and development investments going into the global pharmaceutical and biotechnology sector.

Some of the vaccine front runners currently include China’s CanSino Biologics, Sinovac, Clover Biopharmaceuticals; US-based Pfizer, Johnson & Johnson, Merck & Co., Inovio, Moderna, Novavax; UK’s AstraZeneca, GlaxoSmithKline, Oxford University; Germany’s BioNTech, CureVac; Russia’s Gamaleya Research Institute and France’s Sanofi.

Experts are of the opinion that one or more of these drug manufacturers with COVID-19 vaccines in development could make a bigger fortune very soon, with some of them already well on their way. The global market for vaccines against the novel coronavirus could reach $20 billion (Dh73.5 billion) next year.

GCC pharma firms invest billions into vaccines

Pharmaceutical researchers and manufacturers across the Gulf region have been investing billions of dollars to produce vaccines and medicines, the Pharmaceutical Research and Manufacturers Association in the Gulf (PHRMAG) had noted in a recent meeting.

PHRMAG-member companies indicated how the companies are currently invested in more than 500 research projects developing a new generation of therapeutic and vaccines that will offer effective treatments, preventative or cures for the disease.

So far, researchers in the UAE are undergoing Phase III clinical trials for its own vaccine, which has recently been approved for emergency use among frontline health workers. The country had earlier said that a safe and effective vaccine could hit the market by the end of the year or early 2021.

Vials with a sticker reading, "COVID-19 / Coronavirus vaccine / Injection only" and a medical syringe are seen in front of a displayed Pfizer logo. Image Credit: Reuters

Pharma sector investors pocket big gains

The coronavirus pandemic has been good news for those who were already invested in those pharma companies that were racing to develop a COVID-19 vaccine. Stock prices for many of the competing companies are trading around record highs.

Here are some examples of such stocks. Moderna, whose value has jumped four times from about $8 billion (Dh29.4 billion) at the beginning of this year to about $32 billion (Dh117.5 billion) as of the end of July. Novavax value has soared from less than $300 million (Dh1.1 billion) to over $8 billion (Dh29.4 billion), while BioNTech’s market value has doubled to about $20 billion (Dh73.46 billion).

Investors are betting the urgent market need to resolve what has become a healthcare crisis, will translate into windfall profits for companies that successfully develop and deploy a vaccine.

When companies make fortunes, their investors can too. However, before you go ahead and invest in coronavirus vaccine stocks, here are some key points you should consider.

How much risk can you handle and should you be taking on?

You want to make as much money from your investment as possible, but there's a key principle to be aware of with investing: To achieve higher returns, you must accept a higher level of risk. Before investing in coronavirus vaccine stocks, determine what your risk tolerance is.

Every stock has risks, but the ones you'll have to buy to profit from a coronavirus vaccine come with more uncertainty than most. That's especially true for small biotech companies with no approved products on the market yet. Any setback can cause these biotech stocks to plunge.

It’s important for an investor to keep in mind that earlier a certain drug maker’s pipeline candidates are in the clinical development process, the riskier its stock. For example, a COVID-19 vaccine candidate that's in pre-clinical testing has a much higher chance of failure than one that has sailed through to late-stage clinical testing in humans. Also, the more pipeline candidates that a company has, the less risky it tends to be.

Buying shares of large pharmaceutical companies presents a lower risk level. These drug makers already have multiple approved products on the market and generate significant revenue. Many of them are quite profitable. Although a stumble for their COVID-19 vaccine candidates would cause their shares to fall, it probably wouldn't result in the stock crashing.

A stock market graph. (For illustration purposes only.) Image Credit: File photo

Choosing a pharmaceutical stock that fits your investing style

Once you've objectively assessed how much risk you're willing to take on, the next step is to identify the stocks that best fit your investing style. Below are some ideas based on the three general risk-tolerance levels: low, medium and high.

Investors with low risk tolerance levels should aim to add big pharma stocks that are developing COVID-19 vaccine candidates, like for instance, AstraZeneca, Johnson & Johnson and Pfizer.

Investors that can take on a bit more risk can put their money on stocks like Inovio, Moderna and Novavax. These firms that have at least one pipeline candidate in late-stage testing, which lowers their risk levels, but don't yet have approved products on the market, which brings their risk levels back up. Among these three biotech firms, Moderna has raked in the most external funding for its COVID-19 vaccine candidate, including up to $2.48 billion (Dh9.11 billion) from the US government.

US-based firms, Altimmune Therapeutics and Vaxart, are two clinical-stage biotech stocks with no late-stage programs that only investors with the highest risk tolerance should consider. Vaxart, matter experts reveal, has one of the most intriguing COVID-19 vaccine candidates because it is administered in tablet form, rather than via injection.

Evaluate other benefits or perks the companies might likely face

Additionally, when it comes to any coronavirus vaccine stock you're considering, make sure you evaluate other opportunities and challenges the companies might likely face in the future, which can potentially weigh on stock prices, and hence your profits or losses. For example, all of the companies mentioned have other pipeline candidates.

You might find that there could be compelling reasons to think about buying a stock even if its COVID-19 vaccine flops. AstraZeneca is a case in point. The major league drug manufacturer claims several blockbuster franchises with strong growth prospects, plus a pipeline loaded with potential winners.

Keep in mind, though, that coronavirus vaccine stocks require monitoring. Their prospects change frequently with clinical study results and other developments. Some might very well prove to be stocks you can buy and hold for years, but you need to watch them closely.