The United States government, announced Wednesday that it will support a proposal at the World Trade Organization that will waive intellectual-property protections for the Covid-19 vaccine.
This news sent shares of several vaccine makers lower. BioNTech SE (BNTX) shares fell 3.45% Wednesday, while Moderna (MRNA) fell sharply, losing 6.19% on the day. Both stocks were in the positive territory at 3 p.m., before of the announcement. Shares ofPfizer (PFE) fell sharply at 3 p.m. but ended the day 0.05% higher.
If approved, this will allow capable companies to recreate the successful vaccines in other countries, without having to negotiate and pay licensing fees to the companies that originated the vaccines.
While the news was a negative for shares of the vaccine makers, at least in the short term, this is a positive development for most investors.
U.S. Trade Representative Katherine Tai said Wednesday, "We are for the waiver at the WTO, we are for what the proponents of the waiver are trying to accomplish, which is better access, more manufacturing capability, more shots in arms."
The sooner more of the world gets vaccinated, the sooner our global economy will return to full strength, which for investors means companies operating at full capacity and making money as efficiently as possible.
The cruise and travel industries in particular would benefit from this development as individuals would be able to get back to unrestricted travel once again. In addition to that, a seemingly weekly norm has become the learning of new variants of Covid, some of which have been associated with a higher death and infection rates. While vaccines currently seem to provide protection against these variants, it seems only a matter of time before one of these variants turns out to be vaccine proof, which would set the world back in the fight against the virus. Getting more people vaccinated sooner means a quicker end to the spread, and hopefully, fewer variants.
This decisions doesn't go into into effect immediately, Tai, the U.S. Trade Representative, said negotiations will not necessarily be quick and will require a great deal of negotiation by the countries involved, particularly due to the complexity of intellectual-property rights and the fact that the WTO can only make decisions based on consensus, which, if there is one thing we know about politics, is that consensus does not come quickly or easily.
Despite there being a crucial need for increased supply of vaccines, the vaccine makers are less than pleased with the development, with the companies arguing that the waiver would be ineffective. The vaccine companies claim that few countries have the capacity to create more of the vaccines, even if they knew how.
However, after having seen China build a hospital, from the ground up, in 10-days, these' complaints may be less about feasibility and more about the protection of their formulas - which could be vital in the development of future vaccines.
While a handful of companies may lose well-earned monopolies on these vaccines, an investor with a diversified portfolio is likely to have much more invested in stocks that will benefit from this decision than in this small handful of stocks. That makes this a net positive for most portfolios.
