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Will Emergence of COVID-19 Delta Variant Aid Vaccine Makers?

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The new, highly contagious variant of COVID-19 — Delta — has fueled the risk of a third wave of infection across the globe. Reportedly, the variant was first found in India and is gradually spreading to other parts of the world. The variant is reportedly more transmissible than the previously found UK variant of SARS-CoV-2. The new variant has already led to a rise in cases in the United Kingdom, where daily infections are the highest since March 2021.

Per a Bloomberg article, the Centers for Disease Control and Prevention (CDC) has warned that the delta variant is likely to become the dominant strain in the United States going forward amid current declining infection cases. A few other countries have also issued similar warnings against the variant. Several countries including Russia, Brazil and a few others have seen rising cases amid the delta variant concern. The spread of this highly infectious variant of COVID-19 is increasing the risk of another surge of cases worldwide.

This will likely increase the demand for COVID-19 vaccines and therapeutics. Companies with authorized vaccine/treatments along with others that are developing similar products may get a boost. The U.S. President has urged citizens to get vaccinated at the earliest to reduce the risk of getting infected with the deadly virus. However, vaccine makers need to evaluate their products for efficacy against the delta variant.

Pfizer PFE and its partner BioNTech BNTX are already expected to generate $26 billion in revenues from the sales of their mRNA-based vaccine, BNT162b in 2021. Another mRNA-based vaccine maker, Moderna MRNA also anticipates to generate revenues of $19 billion from sales of its COVID-19 vaccine. Two other companies with authorized COVID-19 vaccines, J&J JNJ and AstraZeneca also received a boost to their top line in the first quarter of 2021 from the sales of their vaccines.

Pfizer and Moderna are also developing their vaccine targeting prevalent variants of COVID-19, including the UK strain and the South African strain. The companies are also developing booster doses of their COVID-19 vaccine, which can be used after a certain period of time to boost a person’s immunity. These developments, if successful, will bring more revenues for these companies.

Moreover, several other pharma and biotech companies are in different stages of developing  their COVID-19 vaccines. Any surge in cases of infection from the anticipated prevalence of the delta variant will likely boost the prospects of these developing candidates as demand for vaccines are likely to be high.

Meanwhile, countries with fewer availability of vaccines may see a rise in hospitalization cases. Importantly, available vaccines are yet to be tested against the delta variant. Ineffectiveness of vaccines against the variant will also likely result in a rise in severe infection cases and resultant hospitalizations in vaccinated countries as well. This may lead to increased demand for COVID-19 therapeutics, leading to higher prospects for companies developing the same, including Eli Lilly and Gilead.

We note that total global COVID-19 infection cases are nearing the 200 million mark and the virus has claimed more than 3.8 million lives so far. However, with the availability of vaccines, some countries seem to have managed to lower the infection rates. However, no country, including the United States, has been able to inoculate their total population. Majority of the countries have vaccination rates of below 10%.

The leading COVID-19 vaccine makers based in the United States — namely Pfizer, Moderna and J&J — currently carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Johnson & Johnson (JNJ) : Free Stock Analysis Report
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