The CSL Limited (ASX: CSL) share price could be in danger, if these new vaccines become the new normal way of doing things.
CSL is Australia’s biggest biotechnology business with a variety of products, including vaccines.
Why might CSL be in danger?
According to reporting by the Australian Financial Review, Bianca Ogden from Platinum Asset Management Ltd (ASX: PTM) believes that CSL needs to invest more into research and development or lose market share because of the technology being used in the new COVID-19 vaccines.
The mRNA (messenger ribonucleic acid) technology, according to the report, triggers an immune response response by teaching cells how to make a certain protein, rather than the conventional approach of inserting a non-threatening sample of the bacteria that causes a disease, such as COVID-19.
Ms Ogden said: “What does [the mRNA technology] mean to the vaccine industry – to the incumbents?
“That has been one of our major investment ideas since 2018 and why we went with mRNA. What can it do to the vaccine industry?”
Other healthcare leaders such as Pfizer and GlaxoSmithKline have also been investing in this technology.
Some thoughts
I’m not remotely an expert on biotech, so I don’t know how much different or better this technology is. But if experts are saying that CSL could be affected then it’s worth taking note.
I wouldn’t expect this to be a rapid shift, but I think it’s important that CSL does what needs to be done. To make a poor analogy, if CSL were a VHS business you’d want it to be investing in DVD technology if mRNA is indeed that much better than what CSL is currently doing.
The healthcare giant invests a very healthy amount of its revenue each year into R&D, around 10%, so it could easily redirect some of that. Or invest more.
CSL didn’t become the giant that it is without knowing what’s best for the long term and how to build a strong market position. I wouldn’t sell my CSL shares on this development, but I’d want to hear the company’s thoughts about it.
However, with the CSL share price currently above $300, which represents a high valuation, I’d rather buy other ASX growth shares such as Pushpay Holdings Ltd (ASX: PPH) which has a longer (fast) growth runway.
