Working Paper: NBER ID: w30126
Authors: Joseph Barberio; Jacob Becraft; Zied Ben Chaouch; Dimitris Bertsimas; Tasuku Kitada; Michael Lingzhi Li; Andrew W. Lo; Kevin Shi; Qingyang Xu
Abstract: We analyze the financial performance of a hypothetical portfolio of 120 mRNA vaccine candidates in the preclinical stage targeting 11 emerging infectious diseases. We calibrate the simulation parameters with input from domain experts in mRNA technology and an extensive literature review. We find that the portfolio generates an average annualized return on investment of –6.0% per annum and a net present value of –$9.5 billion, despite the scientific advantages of mRNA technology and the financial benefits of diversification. Clinical trial costs account for 94% of the total investment, with manufacturing costs accounting for only 6%. Sensitivity analysis reveals that the most important factor determining financial performance is the price per dose, while the increased probability of success due to mRNA technology, adjusting the size of the portfolio, and the possibility of conducting human challenge trials do not significantly improve financial performance. These results underscore that if the goal is to create a sustainable business model and robust global vaccine ecosystem, continued collaboration between government agencies and the private sector is likely to be necessary.
Keywords: vaccine development; mRNA technology; financial performance; portfolio approach; emerging infectious diseases
JEL Codes: G11; G18; G24; G31; G32; H12; H23; H4; H51; H75; I11; I13; I15; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| price per vaccine dose (P22) | financial performance (G32) |
| investment in the portfolio (G11) | financial returns (G12) |
| clinical trial costs (H51) | net present value (G00) |
| probability of success due to mRNA technology (C59) | financial performance (G32) |
| size of the portfolio (G11) | financial performance (G32) |
| possibility of conducting human challenge trials (C90) | financial performance (G32) |