After a Covid-fuelled adrenaline rush, biotech is crashing

THREE years ago, no one had heard of BioNTech. Today, the German biotechnology firm enjoys global renown, as well as annual revenues of US$19 billion.

The company owes both the lustre and the lucre chiefly to the successful mRNA Covid-19 vaccine which it developed in partnership with Pfizer, an American drug giant. Yet, even the effective jab has not immunised it from a downturn afflicting the biotech industry. On Aug 8, BioNTech reported that sales fell by 40 per cent in the second quarter, year on year, as fewer people are left unjabbed and unboosted. Its share price tumbled by nearly 9 per cent.

The biotech industry is particularly vulnerable to the syndrome of slowing economic growth, higher inflation and rising interest rates. As with other tech startups, rate rises make promised profits, most of which lie far in the future, look less hale today. Unlike software firms, biotech companies need constant injections of capital to develop their drugs, which takes lots of time and money.