Back to top

Image: Bigstock

Pfizer Vaccine Approval Triggers a Surge in Biotech ETFs

Read MoreHide Full Article

The biotech space is once again gaining on positive COVID-19 vaccine update. The FDA has granted the first full U.S. approval to Pfizer (PFE - Free Report) /BioNTech’s (BNTX - Free Report) coronavirus vaccine. Cheering the news, the most popular SPDR S&P Biotech ETF (XBI - Free Report) and iShares Biotechnology ETF (IBB - Free Report) surged 4.6% and 2.9%, respectively, on Aug 23.

According to the FDA, the approval has been provided after evaluating an enormous vaccine data covering about 40,000 trial participants and reflecting 91% efficiency in preventing COVID-19 (per a CNBC article). However, the vaccine is still under emergency use authorization for children aged 12 to 15 years, while Pfizer continues to collect more supporting data.

The full FDA approval is expected to increase the confidence for imposing vaccine mandates. Also, the unvaccinated population is now more likely to opt for vaccinations. According to a CNBC article, the Kaiser Family Foundation survey reflected that three in 10 unvaccinated adults were more likely to get jabbed if one of the vaccines is awarded full approval. It is worth noting here that almost more than 60% of the American population has taken at least one dose of a COVID-19 vaccine. Moreover, per the Centers for Disease Control and Prevention data, more than 204 million of the Pfizer shots have been provided since the emergency use authorization was granted by the FDA in December 2020.

The receipt of full FDA approval will allow Pfizer to market the vaccine directly to U.S. consumers, with the shots being eligible to stay in market for sale even after the U.S. comes out of “emergency”, according to a CNBC article. It is also being said that Pfizer/ BioNTech can now raise the price of their vaccines.

Meanwhile, a Reuters report stated that the U.S. government recently announced plans to make COVID-19 vaccine booster shots available starting Sep 20. The decision came at a time when the world’s largest economy is seeing more than 150,000 daily number of coronavirus cases in August, reflecting a sharp spike from less than 10,000 in early July, as reported in a Reuters article.

According to the Reuters report, the booster dose will be provided to individuals who completed eight months of their initial vaccination regimen. The first round of booster jabs will likely be given to people who were vaccinated during the initial rollout of the immunization program last year or early 2021, which includes health care providers, nursing home residents and senior citizens.

Biotech ETFs to Watch out for

The pandemic triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the biotech sector. Against this backdrop, let’s look at some popular biotech ETFs that investors can keep an eye on:

VanEck Vectors Biotech ETF (BBH - Free Report)

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of the companies that are involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. Its AUM is $594.2 million and it has an expense ratio of 0.35% (read:  Moderna ETFs to Shine Bright on Booster Update, New Study Data).

iShares Biotechnology ETF (IBB - Free Report)

This fund seeks to track the investment results of an index composed of U.S.-listed equities in the biotechnology sector. IBB has AUM of $10.86 billion, with an expense ratio of 0.45% (read:  How Are Biotech ETFs Reacting to These Q2 Earnings Releases?).

SPDR S&P Biotech ETF (XBI - Free Report)

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. Its AUM is $6.66 billion and its expense ratio, 0.35% (read:  ETF Investing Areas to Consider for August).

First Trust NYSE Arca Biotechnology Index Fund (FBT - Free Report)

The fund replicates as closely as possible, before fees and expenses, the price and the yield of the NYSE Arca Biotechnology Index. Its AUM is $1.88 billion while its expense ratio is 0.55% (read: Delta Variant Surge Brings Biotech ETFs in Focus).

Principal Healthcare Innovators Index ETF (BTEC - Free Report)

This fund seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Healthcare Innovators Index. It tracks the Nasdaq Healthcare Innovators Index. BTEC charges 42 bps in annual fees and has AUM of $142.1 million (read:  Biogen's Alzheimer's Drug Approval Puts Biotech ETFs in Spotlight).