(Bloomberg) — 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.
Trade Representative Katherine Tai told Bloomberg News that the Biden administration will actively take part in negotiations for the text of a waiver of the rights at the World Trade Organization, and encourage other countries to back it. That sent stocks involved in vaccine production in Asia lower, even as many countries in the region are struggling with a resurgence in a virus.
Shanghai Fosun Pharmaceutical Group Co., which has the rights to develop and market BioNTech SE’s mRNA shot in China, plunged as much as 26% in Hong Kong, the most ever. CanSino Biologics Inc., which makes one of China’s domestic vaccines, tanked 21%, the most in a year. Walvax Biotechnology Co. dropped as much as 16% and Chongqing Zhifei Biological Products Co. fell 14%, dragging the CSI 300 Index’s healthcare gauge more than 5% lower.
In Japan, JCR Pharmaceuticals Co., a local partner for AstraZeneca Plc’s vaccine, slid as much as 2.2% even as positive news around inculcations in western economies helped boost the benchmark Topix index 1.9% higher.
Vaccines have been a big business for the firms that make them, with Pfizer Inc., BioNTech’s partner outside of China, raising its forecast for 2021 vaccine sales to $26 billion just this week. Shares of Moderna Inc., BioNTech and Novavax Inc. earlier fell on the IP rights news.
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.
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 US leadership’s position sways others,” Ruffat wrote in a note.
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