Pfizer and Moderna developed their Covid-19 vaccines at unprecedented speed, dominating the global jab market and driving their share prices to record highs.
But as the outlook shifts from pandemic to endemic in the developed world, Wall Street analysts say drug companies will have to manage investors’ expectations of future sales of their jabs and a drop in the price of his actions.
Shares of Pfizer, which developed its vaccine in partnership with BioNTech, reached record levels this summer as the debate over the need for boosters intensified and countries like the US and UK planned to administer third doses in the fall.
However, some analysts warn that Pfizer, which is valued at more than $ 250 billion, will not replicate the highly successful vaccine sales it has had this year, and that the company will have to manage a further share price decline. beyond 2023, by which time most of the developed world is expected to have received a third chance.
“The market is pricing as if these companies are making $ 20 billion per year almost indefinitely,” said Cory Kasimov, a biotech analyst at JPMorgan. “The stock prices of these vaccine companies are being driven more by momentum and headlines related to variants, boosters, full approval and not fundamentals.”
In a recent note, JPMorgan said that Pfizer’s Covid vaccine sales are unlikely to be sustainable near current levels in the long term, while analysts at SVB Leerink [Pfizer’s] growth prospects due to competitive pressures ”.
Few analysts expect an annual revaccination to be required for everyone, instead predicting that only the elderly or those with weakened immune systems will likely need annual boosters after 2022, a small group that will generate a fraction of recorded vaccine sales this year. .
“It’s becoming more and more likely that a fairly broad group of people will get a third boost in the short term, the next 8 to 12 months,” said Damien Conover, Morningstar’s chief equity strategy officer. “It is not so clear if everyone needs reinforcements in the future. There is an important distinction between a third boost and an annual boost. “
On Wednesday, Pfizer reiterated the need for boosters after presenting data showing that the vaccine’s protection declined six to eight months after the second dose.
Revenues from the Covid vaccine dwarf Pfizer’s other “blockbuster” products – drugs with annual sales exceeding $ 1 billion – including the blood thinner Eliquis and the cancer drug Ibrance. Although the company does not break down earnings for individual products, it said it expected to generate a percentage profit margin in the “high 20s” of its Covid vaccine sales in 2021.
And while the country has multiple contracts with governments for 2022, the company will face increased competition in the coming years, even from those that entered the market later, such as Novavax.
In a sign that the Covid vaccine market is evolving to become similar to the US conventional drug market, with pharmaceutical companies launching advertising to attract patients and doctors, Pfizer and Moderna are hiring new staff to promote their injections. Last month, Pfizer recruited a sales force to announce its booster dose, while Moderna is also expanding its marketing team in the US.
“As we move into the next few years, there is a whole wave of vaccines that are likely to be approved: GSK, Sanofi and many other players,” Conover said, noting that Pfizer will have a difficult time raising prices significantly if it wants to compete.
“The flu vaccine is available every year, but only a minority of patients receive it,” said Vamil Divan, senior health care analyst at Mizuho. “A good percentage of the country has not yet been vaccinated, so when it is endemic it will be even less. [Sales] It won’t be anywhere near what we saw this year. “
He expects Pfizer’s Covid vaccine sales to hit $ 16.3 billion next year, but then halve to $ 8.3 billion in 2023 and decline to $ 2 billion in 2024.
Additionally, patents on several of Pfizer’s best-selling drugs, including Ibrance and Eliquis, will expire in 2026 and 2027, which could further affect overall revenue.
Pfizer said that across its portfolio it expected “at least 6 percent revenue growth, on average, per year through 2025 inclusive.”
“While our Covid-19 vaccine development efforts may play a longer-term role in Pfizer’s growth, the company remains focused on delivering positive clinical trial results for its late-stage project portfolio opportunities. “said the company.
For Moderna, the next revenue cliff will be even steeper. Its Covid vaccine is the only drug approved by the company, and the success of that single product has propelled the biotech group to a market capitalization of $ 175 billion.
Last week, the drugmaker unveiled an ambitious range of drug development programs using mRNA technology, which it hopes to implement to treat diseases ranging from cancer to heart disease. But the vast majority of its portfolio is still in the early stages of testing, and most of the experimental drugs fail.
“One of their struggles will be that investors will look for the next big thing,” said Hartaj Singh, senior biotech analyst at Oppenheimer. “If your pan-respiratory program does not start producing some products during the 2024 period, you will start to see some pain in the share price,” he said, referring to Moderna’s plans to develop a vaccine targeting various respiratory diseases. including the flu. and Covid-19.
Moderna declined to comment on its assessment.
Singh said Moderna’s share price “could be cut in half” and compared it to US drugmaker Gilead, which in 2015 received approval for its drug against hepatitis C, the first effective cure for the disease. Once the patients completed their course of treatment, they no longer needed to take the drug, and eventually the drug faced stiff competition from its rivals.
The rise and fall of Gilead’s market capitalization, which stands at $ 90 billion today, compared to $ 173 billion at its peak in 2015, has become a warning to pharmaceutical companies. They depend heavily on the sales of a single product.
One pharmaceutical investor said “the same dynamic” that hit Gilead was at play in the Covid vaccine market. “It is extremely difficult once you have this great success with just one product. Wall Street is pretty brutal and they don’t put a lot of value on what they think is a limited duration. [on a product]. “