Moneycontrol Pro Panorama | Vaccine windfall for Big Pharma, but at what cost?

Representative image: Reuters

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The vaccine business was a dying segment for Big Pharma before the COVID-19 pandemic. Pharma giants had been easing themselves out of it for decades, as vaccines are used only once or twice — as opposed to medicines that people take more often. Only a handful of companies had a very small share of their overall business in vaccines. Prominent among them were Merck, Sanofi, Pfizer, and Johnson & Johnson.

But for these companies, the COVID-19 pandemic delivered a windfall to their earnings. Pfizer, in its final quarter of 2021, has beaten analyst expectations by doubling its revenue, thanks to its COVID-19 vaccine.

Pfizer's two-shot coronavirus vaccine, Comirnaty, brought in more than $12.5 billion in revenue, which helped the company's revenue double compared to the last quarter of 2020. Annual revenue from the vaccine was to the tune of $36.8 billion or 45 percent of Pfizer’s total revenue. In other words, the vaccine helped create a new Pfizer in one year.

For the calendar year 2022, Pfizer has increased its guidance and aims to be a $100 billion company, riding on the back of Comirnaty and Paxlovid, the first pill to treat COVID.

Pfizer is not the only Big Pharma company to have profited from the pandemic. The People's Vaccine Alliance (PVA), a coalition campaigning for wider access to Covid vaccines, says that Pfizer, BioNTech, and Moderna are making combined profits of nearly $93.5 million a day or $65,000 every minute or $1,000 a second.

The vaccine acted as a booster dose for the entire healthcare sector. From a handful of companies researching and producing vaccines, 200 vaccines were under trial in different parts of the globe, a world record in vaccine history.

It was not only the pharma sector that sought to exploit the opportunity, even governments joined in using vaccine discovery as a nationalist symbol. Astra Zeneca-Oxford developed a vaccine that was called ‘the English one’, while Pfizer’s drug which was developed by a German company and German funding was called ‘the German one’. Russian, Chinese and Indian governments joined in to label their vaccines similarly.

It is easy now for us to criticise the pharmaceutical industry for making an unnatural profit, but then it was a once-in-a-lifetime event. At the peak of the pandemic, people were willing to pay any amount to get their hands on medicines. Black market rates were 3-4 times higher than the rates at which drugs were sold in the market.

Governments were eating out of the hands of pharmaceutical companies and willing to agree to any terms they proposed. This was apparent in the actions of the US government. The White House rapidly appropriated $10 billion for the sector, but after Operation Warp Speed (OWS) — the US government’s COVID-19 relief programme — it ended up parting with $22 billion to Big Pharma.

However, what has not gone down well with the general public is that, apart from the aid provided by the government and profits made from selling their products, pharma company bosses were making money in the share market, trading on news.

Executives at Moderna and Pfizer sold their shares in the market, timing their exit on the day of clinical trial press releases. On November 9, the day Pfizer announced its more than 90 percent vaccine efficacy which saw its share price rise by 15 percent, Pfizer CEO Albert Bourla sold more than half of his holdings — 62 percent to be precise.

As for the markets, while there are parameters for corporate governance, and increasingly institutions are demanding it from their invested companies, there are no parameters to check the quality of profits. As far as companies are making profits and CEOs are working for the benefits of the shareholders, the human cost of generating these profits does not seem to matter.

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Shishir Asthana

Moneycontrol Pro