Johnson & Johnson, and Europe’s AstraZeneca have said they do not plan for profit during the pandemic
Billions in profits are at stake for some vaccine makers as the US moves to deliver COVID-19 booster shots to boost Americans’ protection against the virus.
How much the manufacturers will benefit depends on how big the rollout proves to be.
Exactly who should get the booster was a controversial decision as advisers from the Centers for Disease Control and Prevention spent two days this week looking at the evidence. CDC Director Dr. Rochelle Valensky endorses most of their options: People 65 and older, nursing home residents and people aged 50 to 64 who have chronic health problems such as diabetes should take their last Pfizer dose. should be introduced once after six months of People 18 years of age and older with health problems can decide for themselves whether they need a booster.
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Still, the crisis continues to evolve, and some top US health officials expect boosters to be authorized more widely in the coming weeks or months. And that, plus continued growth in early vaccinations, could mean huge gains in sales and profits — especially for Pfizer and Moderna.
“Clearly this opportunity represents the billions of people around the world who will need vaccinations and encouragement,” said Jefferies analyst Michael Yee.
Wall Street is taking notice. The average forecast among analysts for Moderna’s 2022 revenue has jumped 35% since President Joe Biden laid out his booster plan in mid-August.
Most vaccinations so far in the US have come from Pfizer, which developed its shot with Germany’s BioNTech and Moderna. They have vaccinated 99 million and 68 million people respectively. Johnson & Johnson is at number three with about 14 million people.
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No one yet knows how many people will get the extra shots. But Morningstar analyst Karen Andersen expects Booster alone to be about $26 billion in global sales next year for Pfizer and BioNTech, and about $14 billion for Moderna, if they are supported for nearly all Americans.
Those companies can also gain business from people who initially had other vaccines. In Britain, which plans to offer the booster to those over 50 and other vulnerable, an expert panel has recommended that Pfizer’s shot be the primary option, with Moderna as an alternative.
Anderson expects Moderna, which has no other products on the market, to generate about $13 billion in profit from all COVID-19 vaccine sales next year if the boosters are widely authorized.
It’s hard to forecast potential vaccine profits for Pfizer, but company executives have said they expect their pre-tax adjusted profit margin from the vaccine to be in the “high 20” as a percentage of revenue. Based on Andersen’s sales prediction, it’ll be a profit of about $7 billion from just boosters next year.
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J&J and Europe’s AstraZeneca have said they do not intend to profit from their COVID-19 vaccines during the pandemic.
For Pfizer and Moderna, boosters may be more profitable than basic doses because they won’t come with the research and development costs that companies incur in getting vaccines to market in the first place.
Steve Brozak, CEO of WBB Securities, said the booster shots would represent an “almost net benefit” compared to the starting dose.
Drugmakers aren’t the only businesses that can see a windfall profit from giving out boosters. According to Jeff Jonas, portfolio manager at Gabelli Funds, drugstore chains CVS Health and Walgreens could each bring in more than $800 million in revenue.
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Jonas notes that drugstores may not face competition from mass vaccination clinics this time around, and chains are diligent in collecting customer contact information. This makes it easy to invite people back for boosters.
Drugmakers are also developing COVID-19 shots that target certain types of the virus and say people may need the annual shots they receive for the flu. All this can make vaccines a major recurring source of revenue.
The 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 the booster or the potential expansion of shots for primary school children.
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That would be five times more than the $5.8 billion racked last year by the world’s most lucrative vaccine – Pfizer’s Prevnar13, which protects against pneumococcal disease.
It would also dwarf 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, said Eric Gordon, a business professor at the University of Michigan.
Gordon said that vaccines are not usually beneficial as a treatment. But the success of COVID-19 shots could attract more drugmakers and venture capitalists to the sector.
“The vaccine business is more lucrative, which is good for those of us who need vaccines,” Gordon said.