JNJ's COVID-19 Vaccine Receives FDA Authorization
This adds support for U.S. herd immunity by summer.
The Food and Drug Administration, or FDA, authorized Johnson & Johnson’s (JNJ) COVID-19 vaccine based on strong clinical efficacy and safety, but we don’t expect any change to our fair value estimate for the firm as the vaccine will be distributed on a non-profit basis. However, this remarkable speed to market (joining Pfizer/BioNTech’s and Moderna’s COVID-19 vaccines) shows the innovative power of the drug industry, a key pillar in the moats for the large drug firms. Also, the development of the vaccines creates goodwill that should reduce pressure from ongoing U.S. drug pricing policy plans, which continue to be a major headwind weighing on the industry’s valuation.
A unanimous FDA advisory committee vote in support of J&J’s COVID-19 vaccine on Friday shows strong backing for the vaccine. The FDA quickly granted emergency use authorization for the vaccine in adults on Feb. 27, which further supports the favorable outlook for the vaccine. While the vaccine looks effective, with a roughly 67% reduction in symptomatic disease, we view the competing vaccines from Pfizer/BioNTech and Moderna as more effective, with reduction levels closer to 95%. However, cross-trial comparisons are fraught with error, and J&J's phase 3 trial included significant enrollment in South Africa, which is dominated by a tougher variant. We expect the J&J vaccine will help the U.S. achieve herd immunity by the summer. Further, J&J’s one dose (instead of two) and easier storage (refrigerated instead of frozen) makes the vaccination process easier.
Turning to supply potential, J&J has been setting up manufacturing facilities at risk to prepare for this authorization. As a result, J&J stated that 20 million doses should be ready for the U.S. by the end of March and a total of 100 million in the first half of the year. Without significant supply ramping until April, we assume that mRNA vaccines from Moderna and Pfizer/BioNTech will continue to dominate the U.S. market and the drive to herd immunity.
|Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.|
Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.