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As the thrill ends Pfizer (NYSE: PFE) Y BioNTechit is (NASDAQ: BNTX) The vaccine announcement wanes, some harsh realities have started to set in. The candidate vaccine, while a marvelous scientific feat, has some hurdles to overcome if it is to deliver on its promise to help end the global pandemic.
Beyond regulatory approval, there are manufacturing, logistics and efficiency issues to address. With the world waiting, there is no doubt that human ingenuity will prevail. But getting this vaccine to billions of people may not be the walk in the park that markets seem to take on. Let’s look at some of the problems that the potential Pfizer vaccine will have to overcome to reward shareholders and save lives.
Image source: Getty Images.
Approval
Pfizer appears to have overcome the most difficult technical barrier; The company has developed a vaccine that appears to be 95% effective in preventing COVID-19. However, this is only an intermediate analysis, a preliminary look. While there were more than 40,000 participants in the overall trial, this reported efficacy is based on 170 individuals. I’ll be curious to see if the efficiency rate holds up when more data is revealed.
We also do not know how long this vaccine will remain effective. While vaccines are not normally approved unless they protect people for at least a year, these are not normal times. Pfizer has applied for emergency use authorization from the FDA, which should arrive in the next few weeks. Since the agency has signaled that any vaccine that is more than 50% effective will be approved, I don’t see Pfizer having a problem with approval.
Manufacturing
Messenger RNA, the method used by Pfizer’s candidate vaccine, is highly unstable, and mRNA vaccines have not yet been approved for human use. The creation of mRNA in specially designed stainless steel bioreactors requires sterile conditions with a precise temperature and humidity. This instability is one of the reasons why the vaccine must be kept so cold.
As you can imagine, it is much easier to make a small batch of mRNA for a clinical trial than it is to make hundreds of millions of doses for a large-scale distribution. On the distribution front, at least, Pfizer has been helped. In May, the company agreed to purchase vials of Valor Glass, a container manufactured by Corning (NYSE: GLW) which is specially designed and created for vaccines. Valor is an entirely new category of glass that prevents contamination and enables high-volume production lines to flow smoothly, without clogging.
Early in the pandemic, Pfizer faced a delay in replacing manufacturing equipment and obtaining more raw materials to make the vaccine. The company has addressed those issues and updated production lines in the United States and Europe.
The next challenge will be the custom bags that line the bioreactors where vaccines are produced. These bags act as liners in slow cookers; they are removed when batches are ready, eliminating the need to sterilize bioreactors after each batch. The shortage of these bags, which has lasted for several weeks and counting, was addressed in October when Operation Warp Speed injected $ 31 million into the bag maker, which is now part of Danaher (NYSE: DHR) – increase production. Although funding was needed, the limitation persists.
Distribution
Pfizer was careful to point out that its vaccine candidate was not part of Operation Warp Speed, and with a similar approach, the company has chosen to distribute its own vaccine rather than rely on the government. Given the complex requirements, this is probably for the best. Almost everyone now knows that the Pfizer vaccine needs to be kept at temperatures colder than those recorded in the US (even Alaska!) – negative 94 degrees Fahrenheit.
To maintain temperature while the vaccine is shipped from manufacturing sites in Wisconsin or Michigan, Pfizer developed a supercooled suitcase. The “pizza box”, as they call it, allows you to track temperature and location at all times. With dry ice, the vaccine is kept at the required temperature for 10 days after sealing. The boxes can only be opened twice a day for less than three minutes at a time. Each case contains between 1,000 and 5,000 doses and can take four days in transit. That means each site with a case would have to administer about 850 doses per day before the vaccine is destabilized. More dry ice can be added to extend the timeline, but there’s a shortage of that too.
Storage
The type of freezers needed to store a vaccine at negative 94 degrees Fahrenheit are not cheap or easy to find. Freezers can cost around $ 20,000 and the current wait is about six weeks. Leasing space is an option, but cold storage accounts for only 2% of the overall warehouse market and the availability rate is less than 5%. It just isn’t something that has generated a lot of investment.
While there is a sudden need for many freezers to handle a lot of vaccines, hospitals can have a hard time spending the money knowing they will never use the equipment again. Add in the uncertainty about what the federal government will pay, if anything, beyond the vaccine itself, and you can see the dilemma. Thankfully, Walgreens (NASDAQ: AMB) Y CVS (NYSE: CVS) They have said they are ready and can store the Pfizer vaccine. Given the nearly 20,000 locations between them, this fact may overcome most of the other barriers the vaccine faces and ease investors’ minds.
Administration
Once the vaccine has been developed, tested, manufactured, shipped, and stored, it must be administered. Once again, the Pfizer vaccine raises the bar in terms of difficulty. The vaccine should be mixed at the site of administration with a sterile liquid, usually water, and administered within six hours of creating the solution. Since the vaccine will be shipped in boxes with a high dose volume, rural communities may not have the population or infrastructure to administer a box of doses while they are still cold. Because of this, rural residents who want the vaccine may need to travel to a more centralized location to receive it. At least in nursing homes and long-term care homes, where nearly a third of COVID deaths have occurred, there is a plan. CVS has said it is ready to begin delivering a vaccine to at-risk populations as soon as one is approved.
But there are reasons for cautious optimism
Earlier this year, Pfizer agreed to sell 100 million doses of its candidate vaccine to the US, with an option for a further 500 million. I am confident that the logistical challenges will be resolved and any current shortages addressed. Science has taken a big step forward in creating an mRNA vaccine, and the problems that arise will likely be those that have been solved before, albeit perhaps on a smaller scale.
Although much of the global discussion revolves around how to ensure that less wealthy nations have access to the vaccine, practical considerations span the entire world. Think Australia: while it is a developed economy, the country lacks the manufacturing capacity to create an mRNA vaccine on its own soil, as well as the cold storage chain to maintain the necessary long-term freezing temperatures. If that country is to distribute the Pfizer vaccine, it will have to figure out how to get the drug from the American Midwest into the arms of its citizens in less than 10 days.
Despite the challenges, the United States is fortunate to be where we are on the vaccine. I think the existing cold chain infrastructure and foresight from Pfizer will allow the company to distribute doses to citizens in most of the U.S. That should be enough to bolster the actions and make the company one of the winners of the general vaccine race. It’s on my radar as a stock to buy, but I’ll be much more optimistic when I see people lining up at the local clinic or pharmacy for doses of the vaccine. Only then can investors begin to see 2021 as the year that life returned to normal.
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