On Wednesday, President Joe Biden announced that his administration supported the waiver of intellectual property (IP) rights for COVID-19 vaccines in negotiations at the World Trade Organization (WTO). Is this a danger for Novavax (NASDAQ:NVAX) investors? Not really.
One important point is that Biden’s announcement is not a law or a verdict in a patent case. It’s the announcement of a negotiating position at talks at the WTO. So far, Novavax hasn’t lost anything. And WTO agreements require the consensus of all 164 member countries.
A big stumbling block for the Biden administration is that opening up the door to generic competition won’t speed up distribution of COVID-19 vaccines at all. In fact, the problem right now is the slow pace of regulatory approval (in Novavax’s case) as well as manufacturing and distribution issues.
Novavax already has contracts in place to distribute 1.4 billion doses of its vaccine. Over a billion of those doses are going to developing nations at a reduced price.
Over the last year, the company has been rapidly trying to add manufacturing capacity to meet all this demand. In order to make its adjuvant, Matrix-M, Novavax needs saponin, a chemical that comes from Chilean tree bark. And the biotech needs bioreactor bags for the insect cells it uses to create the vaccines.
Ironically it’s been the U.S. government blocking the export of key raw materials that has hampered Novavax and the distribution of vaccines to developing nations. If the Biden administration really wants to help, it should loosen those bottlenecks.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.