Analyst Note
| Damien Conover, CFA |The Food and Drug Administration has authorized Johnson & Johnson’s COVID-19 vaccine on the basis of strong clinical efficacy and safety, but we don’t expect any change to our fair value estimate as the vaccine will be distributed on a nonprofit basis. However, this remarkable speed to market (joining Pfizer/BioNTech’s and Moderna’s COVID-19 vaccines) shows the innovative power of the drug industry, a key pillar in the moats for the large drug firms. Also, the development of the vaccines creates goodwill that should reduce pressure from ongoing U.S. drug pricing policy plans, which continue to be a major headwind weighing on the industry’s valuation.