Billions more in profits are at stake for some vaccine makers as the US moves toward dispensing COVID-19 booster shots to shore up Americans’ protection against the virus.
How much the manufacturers stand to gain depends on how big the rollout proves to be.
The Biden administration last month announced plans to give boosters to nearly everybody. But US regulators have rejected the across-the-board approach and instead said third shots of Pfizer’s vaccine should go to people who are 65 and older and certain others at high risk from COVID-19.
Still, the crisis is constantly evolving, and some top US health officials expect boosters will be more broadly authorized in the coming weeks or months. And that, plus continued growth in initial vaccinations, could mean a huge gain in sales and profits for Pfizer and Moderna in particular.
The opportunity quite frankly is reflective of the billions of people around the world who would need a vaccination and a boost, Jefferies analyst Michael Yee said.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
Wall Street is taking notice. The average forecast among analysts for Modernas 2022 revenue has jumped 35 percent since President Joe Biden laid out his booster plan in mid-August.
Most of the vaccinations so far in the US have come from Pfizer, which developed its shot with Germanys BioNTech, and Moderna. They have inoculated about 99 million and 68 million people, respectively. Johnson & Johnson is third with about 14 million people.
No one knows yet how many people will get the extra shots. But Morningstar analyst Karen Andersen expects boosters alone to bring in about $26 billion in global sales next year for Pfizer and BioNTech and around $14 billion for Moderna if they are endorsed for nearly all Americans.
Those companies also may gain business from people who got other vaccines initially. In Britain, which plans to offer boosters to everyone over 50 and other vulnerable people, an expert panel has recommended that Pfizers shot be the primary choice, with Moderna as the alternative.
Andersen expects Moderna, which has no other products on the market, to generate a roughly $13 billion profit next year from all COVID-19 vaccine sales if boosters are broadly authorized.
Potential vaccine profits are harder to estimate for Pfizer, but company executives have said they expect their pre-tax adjusted profit margin from the vaccine to be in the high 20s as a percentage of revenue. That would translate to a profit of around $7 billion next year just from boosters, based on Andersens sales prediction.
J&J and Europes AstraZeneca have said they don't intend to profit from their COVID-19 vaccines during the pandemic.
For Pfizer and Moderna, the boosters could be more profitable than the original doses because they won't come with the research and development costs the companies incurred to get the vaccines on the market in the first place.
WBB Securities CEO Steve Brozak said the booster shots will represent almost pure profit compared with the initial doses.
Drugmakers aren't the only businesses that could see a windfall from delivering boosters. Drugstore chains CVS Health and Walgreens could bring in more than $800 million each in revenue, according to Jeff Jonas, a portfolio manager with Gabelli Funds.
Jonas noted that the drugstores may not face competition from mass vaccination clinics this time around, and the chains are diligent about collecting customer contact information. That makes it easy to invite people back for boosters.
Drugmakers are also developing COVID-19 shots that target certain variants of the virus, and say people might need annual shots like the ones they receive for the flu. All of that could make the vaccines a major recurring source of revenue.
The COVID-19 vaccines have already done much better than their predecessors.
Pfizer said in July 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 boosters or the possible expansion of shots to elementary school children.
That would be more than five times the $5.8 billion racked up last year by the worlds most lucrative vaccine Pfizers Prevnar13, which protects against pneumococcal disease.
It also would dwarf the $19.8 billion brought in last year by AbbVies rheumatoid arthritis treatment Humira, widely regarded as the world's top-selling drug.
This bodes well for future vaccine development, noted Erik Gordon, a business professor at the University of Michigan.
Vaccines normally are nowhere near as profitable as treatments, Gordon said. But the success of the COVID-19 shots could draw more drugmakers and venture capitalists into the field.
The vaccine business is more attractive, which, for those of us who are going to need vaccines, is good,” Gordon said.