Stock prices surge for companies working on a coronavirus vaccine!

Following the deadly outbreak of the coronavirus in Wuhan, China, a number of companies and academic institutions around the world are racing against the clock to find a vaccine that can combat the virus. For some pharmaceutical companies, this has meant a huge surge in stock prices, as investors look to profit from what could be a very lucrative investment for the company which is first to create a vaccine which can then be sold to healthcare providers around the world.

Whilst on the one hand, this raises questions over the shady side of pharmaceutical companies and the profiting from the outbreak of a deadly virus, it also demonstrates the power of the free market in responding to global crises, and ultimately helping to eliminate the chance of further loss of life.

Pharmaceutical companies profiting from the sale of vaccines is nothing new, and the argument over its morality will continue long into the future. From a purely economic standpoint though, a few things are for sure: vaccines save lives, they reduce the rate at which diseases can spread, and thus reduce the burden on healthcare providers. For these reasons, vaccines are a classic example of a positive externality. In this article  we discussed the negative impact which smoking has on third parties. Well in the case of vaccines, the effect on third parties is largely positive, and therefore the impact of one person getting vaccinated against a disease will have a number of external benefits on the rest of society. The more people who get vaccinated, the greater the benefit!

For the sake of containing the coronavirus, the sooner a vaccine can be created, the sooner we can protect ourselves against the spread. The creation of a vaccine will also ensure that a pandemic of this nature, with this particular virus, will not be able to happen again.