Morgan Stanley
  • Thoughts on the Market
  • Dec 14, 2020

As a Vaccine Rolls-Out, What’s Next?

Matthew Harrison and Ricky Goldwasser


Harrison: Welcome to Thoughts on the Market. I'm Matthew Harrison, Equity Research Analyst covering biotechnology.


Goldwasser: And I'm Ricky Goldwasser, equity research analyst covering health care services and technology, and on this special edition of the podcast, we'll be talking about the road to covid-19 vaccination and what's ahead in the next few months. It's Monday, December 14th at 8:30 a.m. in New York.


Goldwasser: Matthew, before we dive into timelines and logistics of vaccine, we have two narratives going on right now. One is positive news on the vaccine front and the other is alarming numbers of new cases in the U.S. with daily death tolls at record highs. Maybe we could start with an update on the trajectory of covid-19 in the next few months. Are we going to see these numbers continue until vaccinations are under way or will we see a plateau at some point?


Harrison: Yeah, Ricky, I think, unfortunately, we should expect to see numbers continue to rise. As we've looked at the data, right. We're expecting somewhere around 240,00 cases by the end of the year. And we would expect to see that continue to rise through the first few months of vaccination. We don't expect to see a plateau until sometime in March. And then assuming that the vaccine is deployed effectively, we would expect to see cases start to really fall at that point, and then sometime in the early to mid summer to start to see numbers go down to a very low level.


Goldwasser: So on Friday, the FDA gave emergency approval to the Pfizer vaccine. Now that we are starting the vaccination for covid-19, who will get it first?


Harrison: So obviously a key question for a lot of people. The CDC has a committee called ACP, that committee is in charge of figuring out how to prioritize vaccines. And they so far have said in their first group of people that hospital workers and medical workers, as well as people in long term care facilities are going to be the first group to receive the vaccine.


Goldwasser: After medical workers and people living in long term facilities receive vaccinations, does it go to the general public or are there other groups that would receive it next?


Harrison: So there are two other phased groups before availability to the general public, they would be essential workers and then patients that are at high risk of infection or elderly. Together, so far, the CDC estimates that it will take through the end of March to reach all of those first three phased groups.


Goldwasser: There is a little confusion on how many doses will be available now between the Pfizer and Moderna vaccines and how many will we have next year. Do you have a read on that?


Harrison: So I hope that we'll be in a position by April to start having significant vaccine for the general population. What we know so far is that by the end of this year, Pfizer should be able to deliver to the US somewhere between 30 and 40 million doses and Moderna 20 million doses. So hopefully between 25 and 30 million Americans will be able to be vaccinated with the doses that will be available by the end of the year. Through the end of the first quarter, Moderna expects to deliver an additional 85 to 105 million doses to the US, and Pfizer should deliver the remaining of its first 100 million doses to the US. So hopefully that will be enough to get through the phased groups. And then depending on vaccine data from other vaccines where we're expecting data in the first quarter, we could have availability of more doses. As you might recall, Pfizer has an option agreement with the US government for an additional 500 million doses, and then Moderna has an option agreement for an additional 400 million doses. And while we don't know the timing of when those doses could be released, I think the hope is that significant quantities will be available starting in April.


Goldwasser: And lastly, Matthew, how many other vaccine candidates are in phase three trials in the U.S. and when do you expect we'll know if those other vaccines work as well as the current approved ones?


Harrison: Right, so right now in the first quarter, we're expecting at least three other Phase 3 studies to read out. Together, the companies that are working on those vaccines would expect to have at least a couple billion doses available next year. And so those are obviously very important to both US supply as well as global supply.


Harrison: Ricky, turning to distribution. How is the supply chain preparing for a vaccine rollout?


Goldwasser: On the distribution side, McKesson, who is the central distributor for covid vaccine, has invested about $178 million to shore up its distribution channels and upgrade warehouses. On the vaccine administration side, national pharmacies have been making upfront investments in infrastructure for cold storage technology and fridges, hiring additional pharmacy technicians, and investing in technologies and digital tools to track which individuals have received their first dose of the vaccine and then remind those individuals to come back for a second dose. For context, CVS is hiring about 10000 new technicians to help with the vaccine administration and for comparison the company has 60000 techs today. And that's going to be at an estimated cost of about $400 million per year.


Harrison: And where will people go to get the vaccine?


Goldwasser: The size of vaccine administration will really shift over time as we move from specific groups to the general population. So starting in the earlier phases that you mentioned, hospitals and long term facilities are the primary centers. But as we move towards the general population, we see a meaningful role for retail pharmacies like CVS and Walgreens and large primary care locations such as one medical. Ideal locations are centers which large throughputs. And that's really a distinct difference from the flu vaccine that is administrated at all primary care sites. We think that retail pharmacies locations will capture as much as 60% of the total volumes in the general vaccination phase.


Harrison: And then I think importantly, as part of that, how quickly can the supply chain actually physically vaccinate people? And do you have any view on how long that process will take?


Goldwasser: The amount of time it will take to vaccinate the population depends on a number of factors: How many people will opt to take the vaccine, and another limiting factor is the throughput or the provider's capacity. In a recent report we published, we estimated that up to 75% of the country would be vaccinated, and that's higher than current consensus thinking. So if large retail chains would dedicate 20% of their pharmacy technicians to the task, that would imply that it could take about 4-9 months to vaccinate the general population and would take us to sometime in late summer, to the early fall.


Harrison: And then I think finally, right, there's been a lot of discussion around the hurdles of transporting these vaccines, given the temperature requirements, do you think those hurdles have been addressed? And how confident do you feel in the supply chain's ability to deliver the vaccines?


Goldwasser: So our conversations with the supply chain highlight that these issues have been addressed. The important thing here is that even the Pfizer vaccine can be stored at normal temperatures for a period of five days. And that's why we expect large retail chains and large providers to have a meaningful role here, is they have the capacity for a higher throughput and higher volumes over a short period of time.


Harrison: Great speaking with you, Ricky.


Goldwasser: Matthew, thanks for taking the time to talk.


Harrison: As a reminder, if you enjoy Thoughts on the Market, please take a moment to rate and review us on the Apple Podcasts app. It helps more people to find the show. 

Although the first COVID-19 vaccine has now begun distribution in the U.S., the country still faces alarming numbers of new cases. We dive into the logistics of mass vaccination.

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