Demand for GSK’s shingles vaccine is so high that supply can’t keep pace!
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Demand for GSK’s shingles vaccine is so high that supply can’t keep pace!

Pharmaceutical giant GlaxoSmithKline (GSK)’s new shingles vaccine (Shingrix) is so high in the U.S. that supply can’t keep up. This is a two-edged sword – on the one hand, it implies a potential public health issue. On the other, it could translate into a significant windfall for the British drugmaker further down the line.

GSK’s share price has appreciated by 13% so far this year

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SOURCE: Yahoo Finance

The Centers for Disease Control (CDC) recently made the following announcement on its website:

“Due to high levels of demand for GSK’s Shingrix vaccine, GSK has implemented order limits and providers have experienced shipping delays. It is anticipated these order limits and shipping delays will continue throughout 2018.”

“In response, GSK has increased the US supply available for 2018 and plans to release doses to all customer types on a consistent and predictable schedule for the rest of 2018. Overall, the supply of Shingrix during 2018 is sufficient to support the vaccination of more patients during 2018 than were vaccinated against shingles during 2017.”

In the U.S., there was only one shingles vaccine available prior to GSK’s entry: Merck’s Zostavax. Shingrix’s incredible uptake is a result, at least in part, of the fact that the CDC endorsed it over its competitor for use in older populations. That message, it appears, did not go unheard.

From a business perspective, this is a strong implication that the vaccine could be even more valuable to GSK than analysts originally expected. They said that Shingrix at its peak could be worth around $2 billion per year to the company. Given that GSK has already run out, and sales are still booming, that could have been an underestimate. If the company can keep production in line with demand, they could be sitting on a bigger goldmine than we thought.

Disclosure

Dominion holds GlaxoSmithKline in its Global Trends Managed Fund.


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