In the last twelve months, the pharmaceutical industry’s lightening response to the Covid-19 pandemic, with the production of effective vaccines, has demonstrated the brilliance of science and helped the sector shake-off a poor profile.
The herculean task of vaccinating the entire planet has commenced, but the scale of this logistical test means the roll-out will take years. Initial progress has been slow and uneven, and the increasing number of emerging new variants is raising questions about the long-term effectiveness of the vaccines being issued.
The pandemic may have presented an opportunity for Big Pharma to showcase its contribution to mankind, but can its reputation be changed for good?
Beleaguered starting point
In September 2019, a US Gallup survey reported that the Pharmaceutical industry is “the most poorly regarded (sector) in Americans’ eyes.” Ranking last on a list of 25 industries1, the US public had an extremely poor perception of the sector. Similar, opinions could be found in other parts of the world, especially among developed nations.
Much of this criticism stemmed from allegations of overcharging for drugs, with pharmaceutical companies being depicted as self-serving profiteers with little in the way of a social conscience. President Trump frequently railed against the industry during his presidency, while the Biden administration has indicated it would attempt to reduce drug prices. Anti-vaccination propaganda was also rife prior to the pandemic, with a rise in measles being attributed to low uptake of the available vaccination and the World Health Organisation (WHO) naming vaccine hesitancy as one of the ten biggest threats to global health2.
A spectacular transformation
When the WHO confirmed that the Covid-19 outbreak was a pandemic in March 2020, few would have thought a vaccine would be ready, approved and in use by the end of the year. However, scientists got to work quickly and phase 1 trials of the Oxford/AstraZeneca and Pfizer/BioNTech vaccines commenced in Spring 2020. By November, these vaccines had both demonstrated tolerable levels of efficacy and moved on to the approval stage worldwide.
The pace of this response was truly breathtaking. In fact, it has been the fastest vaccine development ever. To provide some perspective, clinical trials take an average 6-7 years, with subsequent time needed for regulatory approval.
An uneven vaccine roll-out
So far, over 8.5 billion3 doses of the vaccine have been pre-ordered which is technically enough to cover half the world’s population (assuming most vaccines require two doses). Moreover, in early February the number of Covid-19 vaccinations administered worldwide surpassed the total number of confirmed cases, of over 100 million4. This is an encouraging start, but the world has a very long way to go before the virus is tamed.
The logistical complexity of vaccinating the whole planet cannot be underestimated, let alone the cost of this exercise. Therefore, it is unsurprising that wealthy nations are topping the global vaccination roll-out rankings. The stability of the supply chain is currently the number one concern and even developed nations are not immune to these fears. The European Union faced accusations of vaccine protectionism when it threatened to control the exports of EU-manufactured vaccines amid concerns over its own supplies.
The sharp skew of vaccination rates towards more affluent nations had been called out by the head of the WHO, who warned the world was on the brink of a “catastrophic moral failure” if more wasn’t done to support the poorest countries. Last year, the WHO formed the COVAX organisation to try and ensure equitable distribution. So far COVAX has only managed to secure half of its target to provide 2 billion vaccine doses for free, or at a reduced cost. However, wealthy nations, such as the UK, have stated that if they have surplus supply, then they intend to contribute this supply to initiatives supporting vaccinations programmes in poorer countries.
Similarly, the dissemination of vaccines to the poorer areas of the world would be vastly accelerated if the companies behind the vaccines were prepared to waive their intellectual property rights in certain geographies. This is being resisted so far but could deliver a decisive boost for the reputation of the sector.
A profit-making opportunity?
The costs of drugs, and the profit-making ability of pharmaceutical companies, has been at the heart of the industry’s poor reputation and the profit-making potential of the Covid-19 vaccine will be closely scrutinised. Of the three initial vaccines to be approved, the UK’s AstraZeneca is currently the cheapest at around $4 per dose, with the company stating this low price merely covers its costs and will remain low for the duration of the pandemic. US biotech firm Moderna has priced its vaccine at $37 per dose, while the BioNtech/Pfizer is priced at $19.50 per dose. Neither of these companies have committed to AstraZeneca’s not-for-profit pledge and the BioNtech/Pfizer collaboration is set to generate $13 billion (£9.8 billion) in global sales for its vaccine, according to Morgan Stanley5.
It is also important to acknowledge that these scientific breakthroughs were achieved thanks to billions in government and philanthropic backing. According to science data analytics company Airfinity, governments provided £6.5 billion to Covid-19 vaccine research, while not-for-profit organisations donated nearly £1.5 billion6.
Obviously, pharmaceutical businesses have a right to make a profit from their achievements, but at what point does rewarding success turn to profiteering, particularly when public funding has been involved?
To vaccinate or not to vaccinate…
Aside from the pharmaceutical companies themselves, the concept of vaccination also has a substantial public relations hurdle to surpass. While a 2020 study of coronavirus acceptance, reported in Nature Medicine and conducted across 19 countries, showed an average world acceptance level of 71.5%, there were considerable variations by country7. European nations, such as France, Poland and Russia were shown to be particularly sceptical, with acceptance levels at 59%, 56% and 55% respectively.
The implications of this vaccine hesitancy are significant. As many commentators have said, the only way we are going to beat the virus is to beat it together. Governments will need to work hard to counter the vast swathes of misinformation being circulated online if true herd immunity is to be achieved.
The variant challenge
While an increasing number of vaccines have been proven effective, the task for the drug makers is not over yet. The emergence of new strains of Sars-Cov-2, the virus that causes Covid-19, or ‘new variants’, is creating fresh worries about the long-term efficacy of vaccines.
Scientists have expressed confidence that vaccines can be adjusted quickly, but there are still implications for the wider public. Will the virus mutate quickly enough to make the existing vaccines obsolete? How long will vaccines confer immunity for? Will regular re-vaccinations be required (as with the flu)? This latter scenario raises the stupefying, yet increasingly likely, prospect of whether the world will need to be vaccinated annually and how this would be funded.
Despite this list of unanswerable questions, one thing is absolutely clear: the dedication of governments, philanthropists, health services and, notably, the pharmaceutical companies behind the rapid production of Covid-19 vaccinations are to be applauded.
Pandemics are not unprecedented, but modern medicine has shown it is better equipped than ever before to combat them. And this outcome presents an excellent shop window for what can be achieved when these parties collaborate and unite in a common aim.
Whether its tackling the disruption of this pandemic, or tackling future health crises, healthcare is evolving quickly and the pharmaceutical industry is at the forefront of these disruptive innovations. At BNP Paribas Asset Management, we believe that where there is disruption there is opportunity. This is why we will continue to look under the surface so that we can spot these opportunities for our investors to not just achieve long-term investment returns, but also to invest for the good of wider society.