Vaccine makers’ shares fall as US backs patent waiver

U.S. support for a proposal to waive intellectual-property protections for Covid-19 vaccines might be good news for the global inoculation campaign, but it’s an unwelcome turn for firms whose share prices have been buoyed by profits from coronavirus shots.

Pfizer Inc., BioNTech SE, Novavax Inc. and CureVac NV declined in U.S. trading Thursday. Shanghai Fosun Pharmaceutical Group Co., which has the rights to develop and market BioNTech’s shot in China, plunged 14% in Hong Kong, the most ever.

With many countries struggling with a resurgence of the virus, U.S. Trade Representative Katherine Tai said Wednesday the Biden administration will take part in negotiations for the text of a waiver of the rights at the World Trade Organization. The European Union said Thursday it was willing to participate.

CanSino Biologics Inc., which makes one of China’s domestic vaccines, tanked 15%. Walvax Biotechnology Co. dropped 11% and Chongqing Zhifei Biological Products Co. fell 8.7%, dragging the CSI 300 Index’s healthcare gauge more than 4% lower.

In Japan, JCR Pharmaceuticals Co., a local partner for AstraZeneca Plc’s vaccine, slid 1.4% even as positive news around inoculations in western economies helped boost the benchmark Topix index 1.5% higher.

Vaccines have been a big business for the firms that make them, with Pfizer, BioNTech’s partner outside of China, raising its forecast for 2021 vaccine sales to $26 billion just this week. Pfizer slipped as much as 4.1% in the U.S. on Thursday, while BioNTech slumped 15%, Novavax lost 9.8% and Curevac fell 13%. Moderna Inc. dropped as much as 12%, the most since Feb. 23, after first-quarter revenue missed the average analyst estimate. Shares of many of the U.S.-listed companies had fallen late in Wednesday’s regular trading session after Tai’s comments.

The U.S. move “probably isn’t great news for the vaccine manufacturers who will now face generic copies of their vaccine, but as the mutation of the virus has shown, continued research and innovation will be needed and that should provide those companies with future earnings from newer vaccines so I would expect the impact to be short-lived and possibly limited,” said Olivier d’Assier, head of APAC applied research at Qontigo GmbH.

The International Federation of Pharmaceutical Manufacturers & Associations condemned the move as “disappointing.”

“A waiver is the simple but the wrong answer to what is a complex problem,” the group said in a statement. “Waiving patents of Covid-19 vaccines will not increase production nor provide practical solutions needed to battle this global health crisis.”

Umer Raffat, a senior managing director at Evercore ISI who specializes in the pharmaceutical industry, urged caution on the news, noting U.S. support didn’t mean it was a “100% done deal” as other countries are also opposed. It “remains to be seen if U.S. leadership’s position sways others,” Ruffat wrote in a note.