Lost in all the excitement about the Covid-19 vaccine candidates seeking emergency FDA approval is a gigantic logistical challenge — the lack of a cold chain to distribute the vaccine from where it is made to where it’s injected.

A critical part of solving this logistical challenge is making enough ultra-cold freezers to keep the vaccine at below zero temperatures during that journey.

This creates investment opportunities for public and private-equity investors.

Public-equity investors should take a look at the publicly-traded makers of these ultra-cold freezers — including Thermo Fisher Scientific and Avantor. They should also consider logistics companies that provide temperature controlled shipments — such as Cryoport, McKesson and UPS.

Since none of these are pure play maker of ultra-cold freezers, perhaps the biggest beneficiaries of demand for ultra-cold freezers will be the privately held freezer makers — such as Helmer Scientific, Stirling Ultracold, PHC, and So-Lo.

However, these companies are likely constrained in meeting the demand by a lack of capital. Perhaps private equity firms should be circling these companies to provide them the capital they need to scale operations to meet the spike in demand.

Covid-19 Vaccine Must Be Shipped Below-Zero

Vaccines from Moderna and Pfizer are highly effective — 94.5% and 95%, respectively, according to the New York Times.

Both vaccines must be kept cold. As I wrote November 16, The Pfizer vaccine must be stored and transported at minus 94 Fahrenheit; whereas the temperature of Moderna’s vaccine is a relatively balmy minus 4 degrees Fahrenheit.

Moderna’s vaccine also has a longer shelf life. Moderna's is 30 days (versus seven which they previously thought). And the Moderna vaccine can last 12 hours at room temperature. Pfizer’s vaccine has a shorter shelf life — after it’s thawed, it can be stored refrigerated for up to five days.

$2.1 Billion Ultra-Cold Freezer Market

An ultra-cold freezer is essential for keeping the vaccine that cold while it travels from the factory to where it is injected into people.

The global ultra-low temperature freezers market is expected to grow at a 5.67% compound annual rate from $1.4 billion to about $2.1 billion in 2027, according to July 2020 Market Research Future report.

The report notes that demand has increased because of the need to store temperature-sensitive biological products storage. New opportunities have been opened up due to the “presence of major healthcare manufacturers, R&D facilities, and rising healthcare spending,” noted the report.

I am guessing that scramble for ultra-cold freezers to transport Covid-19 vaccine will accelerate that demand will above 5.67%.

While vaccine effectiveness and safety are the most critical considerations for officials trying to manage the vaccination process, sufficient supply and distribution logistics become top concerns once those first two tests are passed.

Biotech company Inovio’s CEO Joseph Kim told listeners to a November 9 conference call, “If you’re trying to deliver a vaccine ... that requires deep ‘cold chain’ like minus 70 or minus 80 Celsius, you are not going to be able to do that in most of the regions and most of the countries outside the U.S. And even the U.S., it is going to be a significant heavy lift to distribute those vaccines,” reported ctpost.

Should You Invest in Thermo Fisher Or Avantor?

Publicly-traded companies Thermo Fisher Scientific and Avantor make ultra-cold freezers which range in price from $12,000 to nearly $30,000, noted ctpost.

Neither company is a pure-play — they make most of their money from other products. Given the companies’ results during the pandemic, I think ThermoFisher has the edge.

ThermoFisher

$28.9 billion (last 12 months’ sales) Waltham, Mass.-based Thermo Fisher Scientific sells scientific instruments and laboratory equipment, diagnostics consumables, and life science reagents.

The firm operates through four segments (revenue figures include some cross-segment revenue): analytical technologies (17% of sales); specialty diagnostic products (15%); life science solutions (36%); and lab products and services (40%). ThermoFisher does not report its ultra-freezer revenues.

ThermoFisher — whose stock has risen 38% this year to $451 a share as of November 20 — is benefiting from the pandemic. DowJones reported that the company expects 20% growth in 2020 revenue to about $30.52 billion and a 48% pop ion adjusted earnings to $18.27 a share for the year.

In October, ThermoFisher said it expects 29% organic growth in the quarter ending December 2020 with an expected $1.75 billion in Covid-19 response revenue, noted Dow Jones.

Avantor

$6.1 billion (last 12 months’ sales) Radnor, Penn.-based Avantor sells materials, consumables, equipment and instrumentation to biopharma, healthcare, education and government, and advanced technologies and applied materials industries.

Its stock has risen about 40% in 2020 to nearly $26 a share, according to Morningstar. Its revenue grew 2% to $4.6 billion in the first nine months of 2020. Sadly, it does not report its ultra-cold storage freezer revenues — which are likely a small proportion of its total sales.

Are Cold-Storage Shippers a Better Bet?

Three logistics companies say they have what it takes to ship Covid-19 vaccines — with some limitations. A McKesson spokesman said “the wholesaler will ship Covid-19 vaccines requiring refrigeration to minus 20 Celsius,” according to the Wall Street Journal. That will be cold enough for the Moderna vaccine but not the Pfizer one.

Cryoport, Nashville, Tenn.-based wholesaler, has been providing temperature-controlled shipments for pharma companies since 2018. It already uses technology that can keep livestock animal vaccines at minus 196 degrees for about a month, noted the Journal. Cryoport is exploring whether that technology could be adapted to ship the Covid-19 vaccine.

Wes Wheeler, president of UPS Healthcare, told the Journal that United Parcel Service plans “by October to finish construction of its freezer farms filled with mobile freezer units in Louisville, Ky., and the Netherlands to serve as stopover points during distribution or while awaiting regulatory decisions.”

Those freezers — which can hold as many as 48,000 vials each, can be configured to hold a vaccine at between minus 85 and minus 20 degrees Celsius. UPS could handle the Pfizer and Moderna vaccines.

Investing Private Equity in Ultra Cold Freezer Makers

If you happen to run a private equity firm, I wonder whether it would be worth looking into investing in privately-held makers of ultra-cold freezers, according to ctpost, such as PHC Holdings — which expects a 50% increase in orders this year, according to Mainichi — and Cincinnati, Ohio-based So-Low.

Others include Noblesville, IN-based Helmer Scientific and Athens, Ohio-based Stirling Ultracold are adding to their workforce and expanding capacity, according to the Irish Sun.

Demand for ultra-cold freezers is going to soar over the next year as the world scales up to ship Covid-19 vaccines. Unless you run a private equity firm, buying ThermoFisher shares could be the best — though imperfect — way to profit from this demand growth.

Follow me on Twitter. Peter Cohan

This article originally appeared on Forbes: Ultra-Cold Freezer Makers To Profit From Covid-19 Vaccine Rush