Zika Virus: If Sanofi SA Pulls This Off, SNY Stock Could Skyrocket

Zika VirusWho will be the first to produce and sell a vaccine against the zika virus?

Zika already affects 1.5 million people in Brazil. Sanofi SA (ADR) (NYSE:SNY) has the lead in the global race for the zika vaccine. The zika vaccine research will give Sanofi stock the boost it needs to move away from its 52-week low range of $38.00 to $39.00. Sanofi can use its expertise and associated infrastructure to speed up identifying an anti-zika vaccine candidate.

How to Profit from the Zika Virus

The World Health Organization (WHO) has declared that zika “meets the conditions for a public health emergency of international concern.” (Source: “Zika virus declared a global health emergency by WHO,” ABC Net, February 2, 2016.) Zika could infect as many as four million people in the Americas. Brazil, with its population of 200 million, is one of the countries at risk.

The virus has already alarmed South America and it is spreading quickly in Brazil. The World Health Organization (WHO) says zika could spread to Africa, Asia, and Southern Europe. This means an eventual zika vaccine would have a market of three to four billion people.

Zika is related to the dengue virus and actually belongs to the same Flavivirus family. The mosquito that spreads zika is of the same variety as the one that carries dengue. Zika also presents the same clinical symptoms of dengue. These include fever, rash, joint swelling, conjunctivitis, and headaches.

Vaccines have not stirred investors’ greed as much as higher-margin pharmaceuticals. Cancer drugs, for example, generate considerable market interest. Just as in the dengue vaccine, which took 20 years to develop, Sanofi hopes that the zika vaccine will benefit patients as well as shareholders. (Source: “Sanofi confident dengue drug will benefit patients and investors,” The Financial Times, July 20, 2015.)

The Financial Times said that Sanofi was targeting a market of one billion people. Sanofi’s CEO, Olivier Charmeil, estimates the potential market of the dengue vaccine at between three to four billion people. (Source: “Sanofi Nears Launch of World’s First Dengue Vaccine,” The Vaccine Reaction, July 22, 2015.)

Vaccines can draw revenue globally.

From the market aspect, it’s best when a virus threatens to spread in the United States or Europe. Pharma companies can make higher profits in those markets. By threatening Americans and Europeans directly, zika ensures that the vaccine will deliver higher earnings than if it were limited to South America or Africa. Sanofi’s dengue fever vaccine will come in handy in reaching the market first with a zika vaccine.

The fact that Brazil is hosting the 2016 Olympics in Rio de Janeiro next August is of special concern. Hundreds of thousands of visitors will enter the country. For Sanofi, developing a zika vaccine in time is an enticing target. A successful zika vaccine would send Sanofi shares higher than any restructuring. Should it do this in time for the Rio Olympics, Sanofi stock would recover its lost ground and return to the $50.00–$55.00 range.

Sanofi Pasteur, Sanofi’s vaccine division, is working on a zika vaccine to prevent both the infection and related illness. Sanofi has already worked on vaccines to deal with viruses from the zika family. It recently received approval for vaccines addressing yellow fever, Japanese encephalitis, and dengue fever. (Source: “Sanofi Pasteur’s Dengue Vaccine Approved in The Philippines,” Sanofi SA, December 22, 2015.)

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