COVID-19 vaccine boosters could mean billions in profits for drugmakers

Billions of additional profits are at stake for some vaccine makers as the United States shifts to distributing COVID-19 booster vaccines to bolster Americans’ protection against the virus.

The payoff that manufacturers stand to gain depends on the scale of the deployment.

The Biden administration announced last month that it plans to give boosters to almost everyone. But U.S. regulators have rejected the comprehensive approach and instead said third injections of Pfizer’s vaccine should be for people 65 and older and some others at high risk of COVID-19.

Still, the crisis is constantly evolving and some senior U.S. health officials expect boosters to be more widely licensed in the coming weeks or months. And that, added to the continued growth of initial vaccinations, could mean a huge boost in sales and profits for Pfizer and Moderna in particular.

“The opportunity very candidly reflects the billions of people around the world who would need a vaccination and a boost,” said Jefferies analyst Michael Yee.

Wall Street is taking note. Analysts’ average forecast for Moderna’s revenue in 2022 has jumped 35% since President Joe Biden presented his stimulus package in mid-August.

Most vaccines to date in the United States come from Pfizer, which developed its vaccine with German BioNTech, and Moderna. They inoculated approximately 99 million and 68 million people respectively. Johnson & Johnson is third with around 14 million people.

No one knows yet how many people will receive the extra hits. But Morningstar analyst Karen Andersen expects boosters alone to bring in around $ 26 billion in global sales next year for Pfizer and BioNTech and around $ 14 billion for Moderna if approved for. almost all Americans.

These companies may also gain business from people who initially received other vaccines. In Britain, which plans to offer boosters to everyone over 50 and other vulnerable people, a group of experts have recommended Pfizer’s shot be the first choice, with Moderna as an alternative. .

Andersen expects Moderna, which has no other products on the market, to generate about $ 13 billion in profit next year on all COVID-19 vaccine sales if recalls are widely authorized.

Potential vaccine profits are harder to estimate for Pfizer, but company executives said they expected their adjusted pre-tax vaccine profit margin to be in the “20s” as a percentage of the figure. business. That would translate to around $ 7 billion in profit next year from boosters alone, based on Andersen’s sales forecast.

J&J and European AstraZeneca have said they have no plans to cash in on their COVID-19 vaccines during the pandemic.

For Pfizer and Moderna, the recalls could be more cost effective than the original doses because they will not come with the research and development costs incurred by companies to bring the vaccines to market in the first place.

WBB Securities CEO Steve Brozak said the booster shots would represent “almost pure profit” over the initial doses.

Drugmakers aren’t the only companies that can benefit from booster delivery. Drugstore chains CVS Health and Walgreens could each generate more than $ 800 million in revenue, according to Jeff Jonas, portfolio manager at Gabelli Funds.

Jonas noted that pharmacies might not face competition from mass vaccination clinics this time around, and the chains are diligent in collecting contact information from customers. This makes it easy to invite people for reminders.

Drugmakers are also developing COVID-19 vaccines that target certain variants of the virus, and say people might need annual vaccines like the ones they get for the flu. All of this could make vaccines a major recurring source of income.

COVID-19 vaccines have already done much better than their predecessors.

Pfizer said in July that it expects revenue from its COVID-19 vaccine to reach $ 33.5 billion this year, an estimate that could change depending on the impact of recalls or the extension. possible injections to elementary school children.

This would be more than five times the $ 5.8 billion accumulated last year by the world’s most lucrative vaccine, Pfizer’s Prevnar13, which protects against pneumococcal disease.

It would also eclipse the $ 19.8 billion brought in last year by AbbVie’s rheumatoid arthritis treatment, Humira, widely regarded as the world’s best-selling drug.
This bodes well for future vaccine development, noted Erik Gordon, a business professor at the University of Michigan.

Vaccines are normally nowhere near as cost effective as treatments, Gordon said. But the success of the COVID-19 shootings could attract more drugmakers and venture capitalists to the field.

“The vaccine industry is more attractive, which for those of us who will need vaccines is a good thing,” Gordon said.


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