Analysts say intellectual property waivers won’t affect vaccine makers Moderna, Pfizer or Novavax—but could paradoxically risk reducing production by disrupting supply chains. 


On Wednesday, the Biden Administration stated that it would support a proposal to temporarily waive protection of intellectual property (IP) rights for Covid vaccines during the pandemic, in a bid to boost production and accelerate vaccine distribution throughout the world. Industry trade groups immediately criticized the move, and investors reacted simultaneously—share prices plummeted, though they’ve been slowly recovering Thursday and Friday. 

Wall Street analysts at Morgan Stanley, Jefferies and Brookline Capital Markets, however, said in reports this week that waiving vaccine IP was unlikely to impact the financials of major vaccine makers, noting that current bottlenecks in vaccine production are related to supply chain, technical knowledge and difficulty in scaling up production. However, they caution that for the same reason, waivers could slow down current production by disrupting the market for raw materials.

“Manufacturing supplies, raw materials, vials, stoppers and other key materials are in limited supply for 2021, and certainly for the 2021 calendar year,” wrote analysts from Jeffries, meaning that waivers can’t solve immediate vaccination needs in India and South Africa, where Covid-19 cases are surging. That report also notes that the mRNA vaccines from Pfizer and Moderna have yet to be authorized for use in India, as regulators desired local clinical trial data, which is another hurdle to overcome.  

Morgan Stanley commented that U.S. support alone doesn’t necessarily mean that a World Trade Organization agreement on the waiver would happen, especially since Germany has expressed opposition. The firm additionally notes that “manufacturing vaccines is a much more complicated process than making chemical drugs, and a patent waiver by itself would not enable other entities to manufacture their own copies of complex vaccines.” 

Jefferies analysts also remarked that another barrier to increased vaccine production is “ensuring the quality of the product, which is also not trivial.” Contractors for vaccine makers Pfizer, AstraZeneca and Johnson & Johnson have all run into quality control issues that have led to millions of vaccine doses being discarded. 

On a company earnings call yesterday, Moderna CEO Stéphane Bancel said he doubted that waiving IP rights would impact his company much, because it would take months or even years for other companies to scale up manufacturing. Meanwhile, the biotech company has recently committed to expanding its own manufacturing capacity, and expects to be able to make up to 3 billion doses of vaccine in 2022.

Morgan Stanley analysts noted that in October 2020, Moderna “stated it would not enforce its patents during the pandemic, but to our knowledge, no one else has started manufacturing a vaccine that would violate Moderna’s patents.” The team at Brookline Capital markets noted that if a company did begin manufacturing vaccines based on Moderna’s patents, the upside would be an additional licensing revenue stream for the company.

On Friday, vaccine manufacturer Novavax, which has reached an agreement with the private-public global health partnership Gavi to provide 1.1 billion vaccine doses to low income countries, stated its opposition to the WTO waiving patents, arguing that it “could further constrain resources by diverting them to entities incapable of manufacturing safe and effective vaccines in the near term.”

Jeffries analysts note that a waiver wouldn’t put Novavax at immediate risk, as a key component of the company’s vaccine “is in limited supply and a majority of the raw material has already been locked up” by the company. 

That said, Morgan Stanley struck a similar point to Novavax about the risk involved in waiving patents. The analysts point out waivers could be counterproductive and actually slow down vaccine manufacturing. “An IP waiver now may exacerbate supply issues,” they write, “if some countries start to try to secure raw materials ahead of being able to produce a vaccine and cause shortages and disruptions in the supply chain.”