Following an FDA approval this summer, Novavax has experienced lower demand for its COVID-19 vaccine than expected. The corporation is now paying its manufacturing partner Fujifilm to end the supply arrangement.
As per the security agreement signed between the two companies, Novavax aims to pay Fujifilm Diosynth Biotechnologies an amount of $185 million in the form of a settlement relating to the closure of their manufacturing facility. The company stated, that after the end of the first quarter of 2023, they will pay the amount in four equal quarterly payments of $34.3 million.
Novavax has made its name in the biotechnology industry by being active in times of every major or minor pandemic. They claim to have invested a hefty sum in research and development. Fujifilm is a contractor company that provides medicine production services to several pharmaceutical companies. As per the company, its aim has always been to advance the medicine of the future.
However, the settlement is not assured to reach that amount as according to the agreement, Fujifilm’s subsidiary must make reasonable efforts to get manufacturing contracts and offset the losses caused by the empty capacity. Any job that Fujifilm Diosynth Biotechnologies is able to land might offset the last two Novavax quarterly payments. Novavax and Fujifilm Biotechnologies have been working together since July 2020, when Novavax used a portion of the $1.6 billion grant award from the government’s operation warp speed program to purchase trial supplies.
In July, after several attempts, Novavax finally received FDA approval for its COVID-19 vaccine in the United States. According to the CDC data figures, the demand has been lower than anticipated when compared to its competitors, with just 32,992 doses being sold out of the 840,000 doses initially supplied by the company. In comparison to these figures, almost 230 million Moderna doses have been provided in the United States. Whereas, Pfizer has sold more than 360 million doses across the United States.
While its competitors such as Johnson and Johnson, Moderna, and others, received approval for their vaccines and were having a successful run of billions of doses sold globally, Novavax was going through a major crisis in terms of production which delayed the approval process. This forced CEO Stan Erck to inform its investors that they were late in entering the competitive COVID-19 vaccine market, leading to foreseeable losses.
At times, Novavax’s COVID-19 vaccine was considered a viable alternative in the market. However, due to multiple delays, the firm has been unable to gain a major market share in the United States. The vaccine was approved in Europe in December 2022 and has been approved in a number of other countries, including the United States.
As of August 2022, the company has distributed over 73 million COVID-19 vaccine doses. However, when compared to its competition which sold doses in much larger quantities, it has underperformed. The pandemic is nearly coming to an end as the demand for vaccines has begun to fall leading to the share price of Novavax seeing a noticeable downward trend as compared to what it was in the last few months of 2021.