Pfizer and BioNTech’s COVID-19 Vaccine Proves 90% Effective
Vaccine Could Be Ready for Limited Distribution by December
A vaccine developed by Pfizer (PFE) and BioNTech (BNTX) has proven to be more than 90% effective in preventing COVID-19 infections. The companies say their vaccine could be ready for limited distribution as early as late December and for widespread distribution by the third quarter of 2021. This is welcome news for many as the US sets new records for daily cases and some parts of Europe implement new lockdown measures.
The vaccine will require two doses per person. The US government has a $2 billion agreement with Pfizer and BioNTech to supply an initial 100 million doses of the vaccine with an option for the government to buy an additional 500 million doses.
The Public’s Changing Perception of Pharmaceutical Companies
Pfizer and BioNTech are among many pharmaceutical companies racing to find a way to stop the virus that has infected over 50 million people worldwide. In recent years, the public’s perception of the pharmaceutical industry has been largely negative. Companies have been blamed for the opioid crisis and high drug prices. Now, as pharmaceutical companies’ efforts to develop a vaccine are in the spotlight, their reputations are getting a boost. Recent data shows that the industry’s net favorability has climbed from 13% to 17% this year. Among people with a bachelor’s degree and an income of $100,000, favorability rose from 17% to 28%.
This shift is causing pharmaceutical companies to change their branding strategies. Historically, companies like Pfizer have focused on branding for their individual products rather than for their own names, but this is changing. Pharmaceutical companies spent $180 million on corporate ads during the first six months of 2020 compared to $167 million during the first half of 2019. Spending on product ads declined slightly during the same period.
In its quest for a vaccine, the pharmaceutical industry has an opportunity to have a huge impact on people’s daily lives and on the economy. The industry also has the rare opportunity to reinvent itself in the eyes of the public.
Ripple Effects Across the Market
Pfizer and BioNTech’s shares soared 8% and 19% respectively on the news about their vaccine. Pfizer shares were up 7.61% at the end of the trading day yesterday and BioNTech shares were up 13.91% .
The news also had ripple effects across other industries. “Stay-at-home” stocks tumbled on the news. Zoom Video (ZM) fell 16%. Amazon (AMZN), Netflix (NFLX), Teladoc Health (TDOC), and Shopify (SHOP) also slid. In contrast, shares of airlines spiked. American Airlines (AAL) and United Airlines (UAL) both rallied about 16% on the news as investors considered the possibility that consumers may be able to return to pre-pandemic travel habits sooner than expected.
It will take time for the vaccine to be granted regulatory approval and for it to be widely distributed, but these results represent a significant step in the right direction. As Pfizer’s CEO Albert Bourla said, “I think we can see light at the end of the tunnel.”
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VF Corporation Acquires Streetwear Brand, Supreme
A $2.1 Billion Acquisition
VF Corporation (VFC), a Denver-based apparel and footwear conglomerate, agreed to acquire the streetwear fashion label, Supreme, for $2.1 billion. VF Corporation owns a number of other popular brands including The North Face, Vans, and JanSport. The Supreme deal is the company’s largest purchase since it acquired footwear company Timberland in 2011 for $2.3 billion.
VF Corporation will buy Supreme from Carlyle Group (CG) and other investors including Goode Partners. The all-cash deal is expected to be closed by the end of the year. VF has said that Supreme could generate at least $500 million in revenue for the company by 2022.
Supreme’s Unconventional Marketing
Supreme is famous for its shirts, hats, and sweatshirts bearing its bold, red and white logo. The company started in 1994 as a skateboarding shop in New York. It is now renowned around the world, but it still operates just 12 retail stores. Supreme also manufactures a limited amount of its products to generate buzz. When Supreme releases new products, they tend to sell out extremely quickly and often cause consumers to line up for hours.
Instead of relying on celebrity endorsements and expensive marketing campaigns, Supreme has achieved a cult-like following through more grassroots efforts on social media and at its brick-and-mortar stores. Supreme’s main Instagram (FB) channel has 13.8 million followers. There is also a slew of independent Facebook pages, Instagram accounts, and Reddit threads centered around Supreme and its product drops. The brand is particularly popular among younger millennial and members of Generation Z.
VF Corporation Looks Ahead
The COVID-19 pandemic has upended the apparel industry. Consumers are doing far less in-person shopping. They are also spending more time at home in comfortable clothing, and are not buying as many new clothes for work or special events. VF sees Supreme as a way to stay competitive in a changing industry. Though Supreme’s in-person stores are famous for long lines and dramatic product drops, online sales generate over 60% of the company’s revenue. Supreme also has such a strong social media presence that word-of-mouth marketing can happen even as people do much of their socializing online.
Investors seem to agree that VF has made a good choice. The company’s shares surged as much as 17% on news of the deal with Supreme yesterday after falling about 30% this year. Monday’s spike marked the biggest gains for VF’s shares since 1987.
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Retailers Look to Micro-Fulfillment Centers to Help Meet Ecommerce Demand
Long Term Shifts
Consumer habits and supply chain norms will likely be permanently impacted by the COVID-19 pandemic. Retailers rushed to respond to these shifts. Now, companies are looking ahead and thinking about how to make large-scale changes to their businesses in order to streamline their ecommerce operations for the long term.
Grocery stores in particular saw demand for online services surge during the pandemic. Many of these companies are now looking at a new type of warehouse as an important component of their business models in the future: a micro-fulfillment center.
The Logistics and Advantages of Micro-Fulfillment Centers
Micro-fulfillment centers are automated warehouses which operate with the help of software solutions and robots. They are much smaller than traditional sprawling warehouses. For this reason, it is cheaper and easier to put micro-fulfillment centers in urban areas than it is to put traditional warehouses in cities. Some micro-fulfillment systems are so small that they can be tucked in the back of already existing brick-and-mortar stores.
An estimated two-thirds of the world’s population will live in cities by 2050. Currently, just over half the world’s population lives in an urban area. This means that the price of real estate in cities could rise over the long-term, and demand for fast, last-mile delivery in cities will also climb. Micro-fulfillment centers will be able to help companies navigate both these changes.
Micro-fulfillment centers also require less labor, which will give companies more resources to hire people to deliver products. Additionally, these centers speed up the process of filling an order. Some systems are able to process an average grocery order in under 15 minutes. Because they can be located close to consumers and processing orders takes less time, micro-fulfillment centers will be able to help more companies deliver products in a matter of hours rather than days.
Analysts Expect Booming Growth for the Micro-Fulfillment Industry
Large grocery chains like Albertsons (ACI) and Walmart (WMT) are in the process of testing several different micro-fulfillment center systems from various providers, including Takeoff Technologies Inc. FreshDirect LLC has partnered with robotics company Fabric to build centers. The Texas-based grocery chain H-E-B has teamed up with Swisslog Holding AG to build a number of micro-fulfillment systems. On the non-grocery side of the retail industry, Nordstrom (JWN) is leading the way in investing in micro-fulfillment technology.
Though most of these operations are in their early stages, it is expected that this technology will be a crucial part of the long term shift to more ecommerce. According to recent data, the market for grocery micro-fulfillment locations could be worth $1.2 billion in four years.