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Insight 14.04.2021

The vaccine disrupting the pharma industry

The vaccine disrupting the pharma industry

UBP talks to Stéphane Bancel, Moderna CEO, to learn how the mRNA technology not only made one of the first COVID-19 vaccines possible, but, more importantly for investors, has the potential to disrupt the broader pharmaceutical industry in its wake.


Stéphane Bancel, the CEO of Moderna, joined UBP’s own experts in an exclusive client webinar exploring how the recently launched COVID-19 vaccines will shape the future of health and investments. In a lively discussion with Norman Villamin, UBP’s Chief Investment Officer Wealth Management, and Pierre Corby, Equity Analyst Healthcare, the discussion explored how the innovative mRNA vaccine development approach combines healthcare and technology with potentially disruptive effects for the pharmaceutical industry.

While there are several COVID-19 vaccines in production by now, Stéphane shared with our audience what it is that sets Moderna’s vaccine apart, namely the messenger ribonucleic acid (mRNA) foundation upon which it was developed. Amidst a worsening global pandemic, this technology has allowed Moderna to shorten the time to market of its vaccine dramatically compared with traditional vaccine development cycles.

For laypersons, mRNA can be thought of like a line of computer programming code for the human body. By adjusting the ‘code’, the mRNA approach allows Moderna to develop new treatments much faster and with a higher success rate than methods used by traditional pharmaceutical companies which rely on approaches that typically take several years to come to fruition, if successful at all. Indeed, Moderna sees itself as a technology company at least as much as a healthcare company, and mRNA as a product platform that has come of age.

As the global population is still grappling with the impact of the pandemic, mRNA technology has helped prevent this pandemic from lasting even longer than it already does. For investors, however, the mRNA platform for the development of therapeutics may disrupt the staid pharmaceutical industry, just as the internet disrupted stable bastions in the media and retail sectors.

Risk factors

Inevitably, with new technologies come concerns about unanticipated risks. In our active Q&A sessions with clients in attendance, there were many who voiced concerns that changing the body’s cellular ‘code’ might trigger unexpected side effects. Stéphane Bancel detailed Moderna’s safety protocols, highlighting that the mRNA molecule is destroyed within 48 hours of being injected into the body, while the lipid particle of the vaccine disappears within 24 hours, meaning that it cannot alter the body’s DNA.

Understandably, with the audience joining in from all parts of the globe, worries about the growing number of variants came up. Moderna’s CEO pointed out that it is no coincidence that several of these new strains emerged in densely populated regions afflicted by high levels of compromised immune systems. However, he showed himself cautiously optimistic that the rapid development cycle of the mRNA technology can help here, as it allows for adapting the vaccine relatively quickly to new variants.

The challenges ahead

The biggest challenge facing all vaccine makers right now is how to ramp up large-scale production. The numbers speak for themselves: Moderna went from producing 100,000 shots in 2020 to committing to providing up to one billion doses in the course of 2021. In no other industrial sector can companies claim to have achieved similarly exponential growth.

In fact, according to Stéphane Bancel, failing to invest in the scaling up of vaccine production is one of the two strategic mistakes the EU has made, along with betting on large companies that were committed to old technology.

As a result, as of the end of February 2021, Moderna had shipped 55 million doses of its vaccine to the US, but just 5 million to the European Union. Although Europe is addressing these shortcomings now, the continent will keep feeling the consequences of last year’s inaction for a while longer, since it takes about six months to build up capacity.

On the business front, the mRNA approach should accelerate new vaccine and drug development timetables and serve as a disruptive technology for the wider pharmaceuticals space.

Indeed, it doesn’t appear too far-fetched to think that the scramble for COVID-19 vaccines may have set in motion a new approach to tackling viral illnesses, paving the way for profound changes in the pharmaceutical industry and public health policies alike.

Our investment views

Villamin_Norman_150x150.jpg
Norman Villamin
Chief Investment Officer (CIO)
Wealth Management
Go to his Linkedin profile.

Corby_Pierre_150x150.jpg
Pierre Corby
Healthcare Equity Specialist
Go to his Linkedin profile.

Expertise

Global equities

Invest in companies with superior and sustainable value creation.


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