| Ticker | MRNA |
| Company Name | Moderna, Inc. |
| Shariah Compliance | FAIL |
| Dividend Purification Ratio | 5.79% |
Report Published as on 31st May 2024
We have conducted an in-depth review of Moderna, Inc. from a Shariah perspective to evaluate its adherence to Shariah principles based on its income sources.
Moderna is a biotechnology company headquartered in Cambridge, Massachusetts, with a primary focus on developing innovative medicines utilizing messenger RNA (mRNA) technology. Their mRNA-based medicines work by instructing the patient’s cells to produce proteins that can combat diseases or provide other health benefits. This groundbreaking approach has enabled Moderna to develop treatments and vaccines for a diverse range of conditions, including infectious diseases like COVID-19, various cancers, rare diseases, and autoimmune disorders. Notably, their COVID-19 vaccine, Spikevax, has played a pivotal role in the global fight against the pandemic, benefiting millions of people worldwide.
Upon assessing Moderna’s revenue sources from an Islamic perspective, it is crucial to scrutinize its operating segments to ensure Shariah compliance.
Segment Breakup: (In millions of USD)
For the year ended 31st December 2023
| Segments | Revenue | Non-Permissible Revenue | % of Non- Permissible Revenue | Non-Permissible Segment Classification | Comments |
| Product sales | 6,671 | – | – | – | – |
| Other revenue | 177 | – | – | – | – |
| Total | 6,848 | – | – | – | – |
Tricky Areas from a Shariah perspective
The company’s revenue is categorized into two main segments: Product sales and Other revenue. A detailed examination of these segments is crucial to determine the Shariah compliance of the company’s operations.
Product Sales: This segment primarily comprises revenue generated from the sale of the COVID-19 vaccine to the U.S. commercial market, as well as ongoing sales to international governments and organizations. From a Shariah perspective, revenue generated from the sale of essential healthcare products, such as vaccines, is considered compliant.
Other Revenue:
- Grant Revenue: This category includes revenue generated from contracts with government-sponsored and private organizations for research and development activities. These contracts typically reimburse costs incurred during research and development, including overhead, general and administrative costs, and a related profit margin. Shariah compliance is maintained as the revenue covers costs and includes a profit margin.
- Collaboration Revenue: Revenue in this category stems from strategic collaborations and similar agreements with third parties for research, product development, and commercialization efforts. Payments to the company under these agreements may include upfront fees, funding for research and development services, milestone payments, etc. From a Shariah perspective, revenue derived from such collaborative efforts is considered compliant.
Upon careful review of the revenue sources and their adherence to Shariah principles, it can be concluded that the business operations of Moderna, Inc. are Shariah compliant.
Next, it is essential to examine the non-operating income of the company to ensure continued adherence to Shariah principles.
Non-operating revenue of the company: (In millions of USD)
For the year ended 31st December 2023
| Segments | Revenue | Non-Permissible Revenue | % Non-Permissible Revenue | Non-Permissible Classification | Comments |
| Interest income | 421 | 421 | 100% | – | – |
| Total | 421 | 421 | 100% | – | – |
It is clear from the table above that the non-operating income of the company includes interest income and Unrealized gain (loss) on debt and equity securities which is Shariah not compliant. This amount is included for the calculation of the Sector Compliance and Dividend Purification.
Sector Compliance Calculation:
| Total Revenue | 7,269 |
| Non-permissible operating revenue | 0 |
| Interest Income | 421 |
| % of non-permissible revenue | 5.79% |
| Sector Compliance | FAILS |
Despite the company’s adherence to Shariah principles in its operating activities, its non-compliance arises from the fact that the interest income exceeds 5% of the total revenue. This significant portion of interest income renders the company non-compliant according to Shariah standards. Consequently, the company does not meet the requirements outlined in the Ratings Intelligence Screening Criteria.
Dividend Purification Calculation:
| Revenue Description | Non permissible Revenue (USD Millions) |
| Non-permissible operating revenue | 0 |
| Non-permissible non-operating revenue | 421 |
| Total non-permissible revenue | 421 |
| Total Revenue of The Company | 7,269 |
| Dividend Purification Ratio | 5,79% |
Financial Ratio Screen:
(All figures in USD Millions for the Quarter ended 31st March 2024)
| Particulars | Amount | Remarks |
| 3 years Average Market | 67,358.81 | – |
| Total Debt | 575 | – |
| Debt Ratio | 0.008536 | – |
Source: All the above information is based on the website of the company, latest Annual Report for the period ended 31st December 2023 and latest quarterly report for the period ended 31st March, 2024.
Conclusion:
Given the above information, we at Ratings Intelligence believe that Moderna, Inc. is a Shariah NOT Compliant company as per the Shariah screening criteria.
