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Here’s what Covid vaccines are worth to Big Pharma



A member of the U.S. Armed Forces administers a COVID-19 vaccine at a FEMA community vaccination center on March 2, 2021 in Philadelphia, Pennsylvania. Located at the Pennsylvania Convention Center, the site is being run as a partnership between the city and the federal government. It is part of a nearly $4 billion plan for FEMA to support more than 400 community vaccination centers across the country.


Despite being priced under $ 20 per dose, Pfizer (PFE) expect sales from developed the vaccine with BioNTech (BNTX) to a total of about $ 15 billion by the end of this year, with a profit margin of nearly 30%.

Vaccines are not usually the most cost-effective products in the Big Pharma catalog, especially compared to the drugs used to treat chronic conditions.

Influenza vaccines on the contrary, there is a lower-margin business, “said Seamus Fernandez, CEO of Guggenheim Securities. There are, of course, exceptions, including the Prevnar vaccine that protects the elderly from pneumococcal pneumonia, which Fernandez describes as” extremely lucrative “for Pfizer. The drug manufacturer ‘s Covid vaccine is likely to be even bigger.

Vaccine development was a gamble for all companies that tried it, even with most drug manufacturers accepting the big governments.

“It would have been a terrible business if the vaccine had failed. It would have been a cancellation,” Fernandez said. “Viouslybviament for Pfizer and Modern (MRNA) and Johnson & Johnson, was dramatically successful. ”
Although Johnson & Johnson (JNJ) has said it will provide the non-profit vaccine as long as the world continues to suffer from the pandemic, this does not mean the company will never make money with it.

This is because among the experts and executives of pharmaceutical companies it is assumed that even after the pandemic has passed, people will have to receive reinforcements to protect themselves from new variants.

“Genetic mutations occur naturally during virus replication and spread,” Albert Bourla, CEO of Pfizer, said in his latest call to analysts. “There is an increasingly likely scenario when it may become necessary in the coming years to empower patients vaccinated against COVID-19 with a vaccine that encodes the variant.”

This would mean even more sales (and more profits) of the vaccine.

Bourla on Thursday defended Pfizer’s gains with the vaccine, though Johnson & Johnson provided it to a nonprofit. He noted that in the poorest countries that cannot afford the dose of less than $ 20 per dollar, the vaccine is offered at its cost. Bourla also said that unlike some other companies, Pfizer did not take money from taxpayers to develop its vaccine and assumed all the risk with an investment of between $ 1,000 and $ 2 billion in research and development.

“The value it brings to the world is much, much greater [than the price]”Bourla said in an interview Thursday CNBC. “Not just the value for health, but the economic value, is tremendous. The price for all Americans is free right now. The price for the government is a fraction of what the economy is earning.”

And, despite the large amounts of money they are likely to contribute, vaccines against Covid do not change the game of many of the big pharmaceutical companies.

Pfizer, on the other hand, expects revenues of between $ 20 billion and $ 44 billion by 2021, with profits of at least $ 14 billion, not counting any increase in revenue from its Covid vaccine. (Its revenues in 2020 amounted to $ 41.9 billion.) Pfizer and other Big Pharma companies have also seen their stock prices record S&P 500 gains over the past twelve months.

An exception is Moderna, a relatively new pharmaceutical company that had no approved products on sale in 2019. The drug maker only had $ 60 million in revenue that year, but earned $ 529 million in revenue and $ 200 million in revenue. of dollars for the first vaccine sales in 2020. The forecast for 2021 is revenue of 16 billion dollars, mostly from vaccine sales. Shares of Moderna have risen 187% in the last twelve months.

Governments around the world have placed orders for 18 billion doses of various vaccines since late last year and so far, according to an estimate by Airfinity, a London-based research company. That’s more than enough to vaccinate each of the nearly eight billion people on the planet twice each. These orders were made before governments could be sure that all vaccines would be developed successfully or that the production of each company would be sufficient to meet demand.

And some development efforts found problems.

One of the reasons Merck (MRK) he had the excess capacity to help produce part of the Johnson & Johnson vaccine Is this development efforts themselves failed. Thursday, Denmark, Iceland and Norway the suspended use of a vaccine was developed per AstraZeneca (AZN) and Oxford University after reports of blood clots. And some other companies, included GlaxoSmithKline (GLAXF) and his partner Sanofi (SNY), are still testing and awaiting initial approval for their vaccines, which may not arrive until much later this year.

But whether they add billions or nothing to the results of individual companies, one thing is clear; vaccines are an advantage to the industry, like never before.

Usually not even patients who take a drug on a daily basis know which manufacturer produced it. At best, they know the name of the drug, said Tinglong Dai, a business professor at Johns Hopkins Unversity. Coronavirus vaccines, on the other hand, have given drug manufacturers the best brand development to date, he said.

“There’s really been a maritime shift in the way people perceive them,” Dai said. “They’re not greedy pharmaceutical companies charging outrageous prices. They’re saving the world. It’s a really brilliant PR.”

In fact, the development of vaccines could even help calm the recent conversation about the government’s action to reduce drug prices, he said.