News analysis
Pfizer asked the Food and Drug Administration (FDA) on Nov. 16 to authorize its experimental antiviral pill for COVID-19.
Merck’s COVID-19 antiviral pill has already been approved by the UK’s Medicines and Healthcare products Regularly Agency (MHRA), and the company has also applied for approval with the FDA.
As the pandemic has reportedly killed more than
5 million people across the globe, the race to find the most effective, easy-to-use treatments for the virus continues. But what do these rapid changes in drug development and new product offerings mean for share prices and revenues for COVID-19 vaccine makers?
COVID-19 vaccines have provided hundreds of billions of dollars in sales to drug makers. It’s projected that by the end of 2021, Pfizer-BioNTech COVID-19 vaccine sales will reach
$36 billion. These companies have invested time and money into developing the vaccine, and it’s believed that they'll bring in a profit of nearly 30 percent from those investments, significantly higher than the
profits allowed for companies during previous crises such as World War II.
Therefore, COVID-19 vaccines are a moneymaker for pharmaceutical companies. Mutations of the virus may be bad news for the world in terms of infections, hospitalizations, and deaths, but it’s a welcome scenario for pharmaceutical companies, because new variants lead to the need for vaccine booster shots, which, in turn, mean more sales and more profits.
It’s important to acknowledge that Pfizer didn’t take any taxpayer money to develop its vaccine. It invested in its research and development from its own pocket. It did this simply because the economic value of the final product is tremendous for the company. Most governments worldwide are vaccinating their citizens for free, but the drug makers still get paid by these governments. It’s a big win for those companies.
According to figures from the
Peoples Vaccine Alliance, both Pfizer-BioNTech and Moderna are making cumulative profits of more than
$65,000 every minute. But the fact is that vaccine distribution remains inequitable, with richer countries still enjoying most of the benefits, while poorer countries continue to struggle to acquire them.
The
gap in vaccination rates between rich and poor countries is staggering. The number of vaccine doses for rich countries is about 50 times more than that of poor countries. The countries with the lowest income have the lowest vaccination rates.
Pharmaceutical companies—especially Pfizer and Moderna—have seen a significant increase in their share prices due to their most recent vaccines. However, the risk of new vaccine entrants, the Merck and Pfizer COVID-19 oral pills, and the hopeful possibility that the pandemic will end soon are all factors that will and should affect share prices. Pfizer’s announcement of its new antivirus pill Paxlovid has already resulted in stocks of vaccine makers falling in Asia. Similarly, when Merck announced its COVID-19 pill, shares for Moderna and Novavax dropped immediately, and billions of dollars in market value were wiped off with a simple announcement.
The COVID-19 pill could be a game-changer and could significantly reduce the demand for COVID-19 vaccines. The
Biden administration has already announced that it will purchase 10 million courses of Pfizer’s COVID-19 pill. This is a $5 billion investment. Keeping these developments in mind, Moderna, Astra-Zeneca, and Johnson & Johnson share prices and revenue streams can’t be considered consistent in the long run.
In particular,
Moderna doesn’t have any other “breakthrough” products to keep this trend running, and if vaccine booster shots aren’t authorized or deemed necessary in the months to come, the company’s revenue and share prices could shrink. The vaccine is the company’s first product, and while there’s no doubt that it has accomplished big things during the past 18 months, with its market value climbing from $6 billion to $195 billion, the future may not be as rosy.
The bigger players—
Pfizer and Merck—should hold more stability when it comes to revenue generation and share prices compared to other vaccine makers in the long term. Pfizer in particular, with its COVID-19 pill soon to be authorized, doesn’t seem to be slowing down its market domination in the COVID-19 treatment category.
