Reports say the Trump administration blames child deaths on COVID-19 vaccinations, causing biotech stocks to plunge.

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On Friday the 12th Eastern Time, media reports revealed that the Trump administration linked the causes of death of several children to COVID-19 vaccine injections and is considering limiting the scope of vaccinations.

This news drew investors' attention, with market concerns quickly spreading across the entire biotech sector, as investors closely watched the potential impact of policy changes on the vaccine industry. U.S.-listed biotech stocks plunged across the board.

Early in the U.S. trading afternoon, the intraday decline of the Nasdaq Biotechnology Index widened to 1.5%. Among the index's components, German company BioNTech, which developed a COVID-19 vaccine, led the losses with an intraday drop of over 10%. Moderna, a rival vaccine developer, fell more than 7%.

Among other components, Trevi Therapeutics fell nearly 9%, Sutro Biopharma dropped 8.5%, while Precigen, Arcturus Therapeutics Holdings Inc., Tarsus, Travere Therapeutics, Personalis, Arbutus Biopharma, and KalVista Pharmaceuticals dropped between 7.49% and 5.27%, following closely behind.

Another biotech company developing COVID-19 vaccines, Novavax, saw its intraday drop exceed 4%. BioNTech’s partner in COVID-19 vaccine development—Pfizer—had a relatively smaller loss, dropping over 3% at midday.

Commentary pointed out that the COVID-19 vaccine is almost Moderna’s only source of revenue, while Pfizer has a larger and more diversified product portfolio.

Questionable data source, market worries about policy fallout

Media reports on Friday stated that Trump administration health officials will brief CDC advisors next week regarding the matter.

The report pointed out that information on these 25 child deaths comes from the U.S. federal Vaccine Adverse Event Reporting System (VAERS). The officials’ findings linking COVID-19 vaccines to child deaths seem to be based on information submitted to this system. However, reports collected by this system are unverified.

VAERS collects a large amount of unfiltered data with the aim of early side-effect detection. Anyone can submit a report; the system does not verify details or prevent duplicate submissions. Some media have quoted scientists as saying that this model makes it difficult to draw definitive conclusions.

The U.S. Department of Health and Human Services (HHS) has not yet responded to other media requests for comment. Market participants are closely watching for further moves in Trump administration vaccine policy.

The sharp decline in the biotech sector reflects worries about policy uncertainty and prompts a re-evaluation of the vaccine industry’s outlook.

The Trump administration had already started limiting the scope of vaccine administration. Last month, the FDA restricted approval of COVID-19 vaccines to high-risk groups, whereas previously all people over 6 months old were eligible.

Investors fear that if the Trump administration further tightens vaccination policies, it could deliver a significant blow to vaccine manufacturers’ businesses—especially those highly dependent on COVID-19 vaccine revenue.

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