How to invest in a vaccine – and why you shouldn’t

Scientists are getting closer to developing a vaccine for Covid-19. Success would be a game-changer and mark a key turning point in the fight against the virus.

Investors are betting it would be a boon for the winning company as governments around the world would clamber to place orders.

Moderna, a biotechnology company based in America, is leading the race, according to Nina Deka of Robo Global, a research group. Its share price has risen by 170pc this year but has been very volatile.

Larger, more diversified companies carry less risk, according to Dan Mahony of Polar Capital, the investment manager. They include Pfizer, which has a deal with BioNTech, a German biotech company; Johnson & Johnson, whose vaccine programme is nearing clinical trials; AstraZeneca, which has a partnership with Oxford University and expects to announce trial results in June; and GlaxoSmithKline, which is working with Sanofi, the French company.

However, healthcare analysts say it is a “mug’s game” to chase a vaccine because the risks outweigh the rewards for investors. Ms Deka said attempting to find the winning company did not make sense as there were so many firms in the fold. “This translates to a great deal of information to pick through. Most people don’t have that kind of bandwidth,” she said. Even finding a vaccine would not necessarily translate into profits, according to Mr Mahony. He said the news that a division of America’s Department of Health had announced an £820m funding agreement with Oxford University and AstraZeneca meant that government involvement would curtail profits. “During the pandemic any vaccine is likely to be sold at cost because the manufacturing scale-up needed will require significant funding from governments around the world,” said Mr Mahony. He argued that in the longer term the most significant implication for investors was that the drug industry had stepped up at a time when the world needed it. This would help firms in the debate about drug pricing and boost future profits, he said.