The Moderna Inc (NASDAQ: MRNA) stock price edged 4.87% lower today as markets barely reacted to its latest announcement. The biotech company recently announced plans to invest in China and start manufacturing messenger RNA medicines there.
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The mRNA medicines manufactured by Moderna in China will be strictly used within the country and not for export. The move comes when tensions between the US and China are skyrocketing, leaving many US companies weighing their options regarding China.
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However, China is the world’s largest single market, and ignoring the country does not make business sense. Moderna’s decision to manufacture and sell its mRNA drugs in the country is an intelligent business decision, but many wonder if it will be caught in the geopolitical crossfires.
Moderna is looking to capitalise on the success of its COVID-19 vaccine to expand into new markets and to start manufacturing other drugs that utilise the mRNA technology. The mRNA technology teaches human cells to generate an immune response against viruses.
According to reports from Chinese media, Moderna is expected to invest about $1 billion in building Chinese manufacturing and tech facilities. The company’s CEO visited Shanghai on Monday, but the final investment figures are yet to be released.
Moderna’s spokesperson said: “These agreements are focused on strengthening health security by targeting unmet needs and contributing to the ecosystem of medical solutions available to patients in China,”
However, the spokesperson did not specify the size of the deal. We can also assume that the plant will be based in Shanghai, given that Moderna’s CEO was visiting the city. The company has other deals with countries such as Japan, Canada, Australia and Kenya to build manufacturing facilities.
The deals with other countries involve the local manufacture of COVID-19 vaccines and, in some cases, the export of the same to other countries. However, this is Moderna’s first deal with China. The company is keen to sell its COVID-19 vaccine to China after registering a legal entity there.
China will also benefit from the deal since it has struggled to develop homegrown mRNA technology.
*This is not investment advice.
Moderna stock price.
Despite news of its Chinese contract, the Moderna stock price was trading down 4.87% at $117.52 from $123.54.
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