Lost in all the excitement over Covid-19 vaccine candidates seeking emergency FDA approval, it’s a mammoth logistical challenge – the lack of a cold chain to distribute the vaccine from the where it is made to where it is injected.
A critical part of solving this logistical challenge is to make enough ultra-cold freezers to keep the vaccine at sub-zero temperatures during this trip.
This creates investment opportunities for public and private investors.
Public equity investors should take a look at the publicly traded manufacturers of these ultra-cold freezers – including Thermo Fisher Scientific
Since none of them are ultra-cold freezer manufacturers, perhaps the biggest beneficiaries of the demand for ultra-cold freezers will be private freezer manufacturers – such as Helmer Scientific, Stirling Ultracold, PHC and So-Lo.
However, these companies are probably forced to meet demand due to a lack of capital. Perhaps private equity firms should circle these firms to provide them with the capital they need to grow their businesses to meet increased demand.
Covid-19 vaccine must be shipped below zero
Moderna and Pfizer vaccines
Both vaccines should be kept cold. As I wrote on November 16, Pfizer vaccine should be stored and transported at minus 94 degrees Fahrenheit; while the temperature of Moderna’s vaccine is relatively mild minus 4 degrees Fahrenheit.
Moderna’s vaccine also has a longer shelf life. Moderna is 30 days (up from seven they previously thought). And the Moderna vaccine can last for 12 hours at room temperature. Pfizer’s vaccine has a shorter shelf life: once thawed, it can be stored in the refrigerator for up to five days.
$ 2.1 billion ultra-cold freezer market
An ultra-cold freezer is essential to keep the vaccine as cold as it travels from the plant to where it is injected into people.
The global ultra-low temperature freezer market is expected to grow at a compound annual rate of 5.67%, from $ 1.4 billion to approximately $ 2.1 billion in 2027, according to Market Research Future report from July 2020 .
The report notes that demand has increased due to the need to store temperature-sensitive organic products. New opportunities have opened up due to “the presence of large healthcare manufacturers, R&D facilities and increasing healthcare spending,” the report notes.
I suspect the rush for ultra-cold freezers to transport the Covid-19 vaccine will accelerate this demand above 5.67%.
While vaccine efficacy and safety are the most critical considerations for officials attempting to manage the immunization process, sufficient supply and distribution logistics become a major concern once these first two tests are successful.
CEO of biotech company Inovio, Joseph Kim, told listeners on a conference call Nov. 9: “If you’re trying to deliver a vaccine … that requires a deep ‘cold chain’ like minus 70 or more. minus 80 Celsius, you won’t be able to do it in most areas and in most countries outside of the United States and even in the United States, distributing these vaccines will be a daunting task, ”ctpost reported.
Should you invest in Thermo Fisher or Avantor?
Publicly traded companies Thermo Fisher Scientific and Avantor make ultra-cold freezers that range in price from $ 12,000 to nearly $ 30,000, ctpost noted.
Neither company is a pure game – they make most of their money from other products. Considering how well the companies performed during the pandemic, I think ThermoFisher has the advantage.
$ 28.9 billion (last 12-month sales) Thermo Fisher Scientific, based in Waltham, Mass., Sells scientific instruments and laboratory equipment, diagnostic consumables and reagents for the life sciences.
The company operates through four segments (sales figures include some cross-segment revenues): analytical technologies (17% of sales); specialized diagnostic products (15%); life science solutions (36%); and laboratory products and services (40%). ThermoFisher does not report its income from ultra-freezers.
ThermoFisher – whose stock has risen 38% this year to $ 451 a share as of Nov. 20 – is benefiting from the pandemic. DowJones reported that the company expects 20% revenue growth in 2020 to around $ 30.52 billion and adjusted earnings of 48% of the population to $ 18.27 per share for the year.
In October, ThermoFisher said it expects 29% organic growth in the quarter ending December 2020 with expected revenue of $ 1.75 billion in response to Covid-19, Dow Jones noted. .
$ 6.1 billion (last 12 months sales) Avantor, based in Radnor, Pa., Sells materials, consumables, equipment and instruments to biopharmacy, healthcare, education and government, as well as the advanced technology and applied materials industries.
Its stock rose about 40% in 2020 to nearly $ 26 a share, according to Morningstar. Its revenues grew 2% to $ 4.6 billion in the first nine months of 2020. Unfortunately, it does not report its ultra-cold freezer revenues – which probably only represent a small proportion of its total sales. .
Are cold storage shippers a better bet?
Three logistics companies say they have what it takes to ship Covid-19 vaccines – with some limitations. A McKesson
Cryoport, a wholesaler based in Irving, Texas, has been providing temperature-controlled shipments to pharmaceutical companies since 2018. It is already using technology to keep farm animal vaccines at minus 196 degrees for about a month, noted the Newspaper. Cryoport is investigating whether this technology could be adapted to ship the Covid-19 vaccine.
Wes Wheeler, president of UPS Healthcare, told the Journal that United Parcel Service
These freezers, which can hold up to 48,000 vials each, can be configured to hold a vaccine between minus 85 and minus 20 degrees Celsius. UPS could handle the Pfizer and Moderna vaccines.
Investing Private Equity in ultra-cold freezers
If you’re running a private equity firm, I wonder if it would be worth investing in private ultra-cold freezer manufacturers, according to ctpost, like PHC Holdings – which expects a 50% increase in prices. orders this year. , according to Mainichi – and So-Low, based in Cincinnati, Ohio.
Others include Noblesville, Helmer Scientific, based at IN, and Stirling Ultracold, based in Athens, Ohio, are adding to their numbers and increasing their capabilities, according to the Irish Sun.
Demand for ultra-cold freezers will skyrocket over the next year as the world prepares to ship Covid-19 vaccines. Unless you’re running a private equity firm, buying ThermoFisher shares might be the best – albeit imperfect – way to take advantage of this growing demand.