CSL loses $10 billion in vaccine crossfire after Trump Administration scepticism

Vaccine scepticism fuelled by Trump administration Health Secretary, Robert F Kennedy, contributed to a $10 billion share market wipe out for Australian healthcare giant CSL.

The Melbourne-based healthcare giant warned investors on Wednesday that vaccination rates in the US over the northern hemisphere’s winter have fallen up to 8 per cent in a shift linked to worries over side effects from the COVID-19 vaccines and Mr Kennedy’s vaccine scepticism.

The weak result for CSL’s flu vaccine business named, Seqirus, also contributed to a $US1.1 billion ($1.5 billion) write down to the value of the group’s assets and shock departure of chief executive Dr Paul Mckenzie after less than three years in the role.

CSL shares have now tumbled 11 per cent in the two trading sessions to Wednesday to extend its nosedive to nearly 38 per cent over the past 12 months.

Parts of US turn vaccine sceptical

On an earnings call with analysts, Dave Ross, the biotech’s GM and senior vice-president for Seqirus said lower demand for flu vaccines in the US has put downward pressures on global prices, where demand has also sagged by low-to-mid-single digits.

Mr Ross also suggested that Mr Kennedy’s anti-vaccine commentary and advocacy for freedom of choice, including in schools, had lowered demand North American demand.

“Sadly, pediatric deaths are again on the rise, with the overwhelming majority of those deaths occurring in children who are either under or unvaccinated,” Mr Ross told CSL’s investor call.

“As a reminder, last year marked a 15-year high in influenza disease and it’s currently trending to be an equally bad or even worse flu season this year. There are at least 20 million cases this season in the US, with disease activity still running high.”

Mr Ross added that he’s confident the group’s sales will eventually rebound, even as the US Government’s healthcare leader has periodically claimed there’s no such thing as a safe vaccine.

“As I’ve stated before, the science and the data will ultimately prevail,” Mr Ross countered. “The public health consequences of influenza are just too big to ignore.

“With the rising burden of disease and recent US policy changes, we’re seeing a groundswell of stakeholder momentum building to combat vaccine hesitancy. The most notable being the American Academy of Pediatrics’ reaffirmation that all children six months and above in the US should be immunised.”

In the US on Wednesday, shares in mRNA vaccine pioneer Moderna also tumbled 7 per cent as the nation’s healthcare regulator the Food and Drug Administration rejected its request to review an application to commercialise a new mRNA vaccine.

Moderna argued the rejection was inconsistent with prior guidance from the agency that’s overseen by Mr Kennedy’s US Health Department.

Blue-chip collapse

As it fronts the share price wipe out partly linked to the policies of US President Trump, the healthcare giant is yet to announce a permanent replacement for departed chief executive Dr Mckenzie.

For the six months to December 31 its net profit tumbled 81 per cent to $US401 million ($566 million) when including a $US1.1 billion write down. After excluding the write down the group’s adjusted net profit fell 7 per cent to $US1.9 billion. For the full financial year ending June 30 it maintained guidance for adjusted net profit growth between 2 and 3 per cent.

But analysts are sceptical about its chances of meeting this guidance as it will rely on the company delivering a much stronger result over the six months to June 30.

“We think there is now a very large question mark around what CSL can say to convince investors that ambitions for the second half (of its financial year) can be realised,” said Citi’s Laura Sutcliffe. “Seqirus (the seasonal flu vaccine business) typically contributes little to nothing in the second half in terms of profits.

Elsewhere, broker RBC Capital described the result for its core blood products business as “very weak”.

The group said current non-executive director Gordon Naylor has been appointed interim CEO until it finds a new leader to execute its turnaround strategy.