Pfizer and Moderna investors prepare for the eventual decline in vaccine sales

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Pfizer and Moderna developed the Covid-19 vaccine at an unprecedented speed, dominated the global jab market, and pushed their stock prices to record highs.

But as developed countries transition from a pandemic to an epidemic, Wall Street analysts said that drugmakers will have to manage investors’ expectations of their future sales and stock price declines.

Pfizer, which is cooperating with BioNTech to develop a vaccine, hit a record high this summer, as the debate over whether a booster is needed has intensified, and countries such as the United States and the United Kingdom plan to provide a third dose of the vaccine in the fall.

However, some analysts have warned that Pfizer, which is valued at more than US$250 billion, will not replicate this year’s blockbuster vaccine sales, and that the company will have to manage the decline in stock prices after 2023, when most of the developed countries are expected to Get the third shot.

Cory Kasimov, a biotechnology analyst at JPMorgan Chase, said: “The market is priced as if these companies will generate $20 billion in revenue almost indefinitely each year.” “The stock prices of these vaccine companies are more affected by Variations, boosters, full approval rather than fundamentals-related momentum and headlines.”

In a recent report, JPMorgan Chase stated that Pfizer’s Covid vaccine sales are “unlikely to remain anywhere near current levels” for a long time, while SVB Leerink analysts “see [Pfizer’s] Growth prospects due to competitive pressure”.

Few analysts predict that everyone will need to be revaccinated every year, but predict that only the elderly or people with weakened immune systems may need to be vaccinated every year after 2022-this small group will generate the vaccine sales recorded this year A small part of the amount.

“In the next 8 to 12 months, more and more people are more likely to get a third boost,” said Damien Conover, head of stock strategy at Morningstar. “Whether everyone needs a booster in the future is unclear. There is an important difference between the third booster and the annual booster.”

On Wednesday, Pfizer reiterated its demand for enhancers after providing data Decreased protection of vaccines Six to eight months after the second dose.

Bar chart of revenue (US$ billion) shows that Pfizer’s Covid vaccine sales surpass other top products

Covid vaccine revenues dwarf Pfizer’s other “blockbuster” products-drugs with annual sales of more than $1 billion-including the blood thinner Eliquis and the cancer drug Ibrance. Although the company did not announce the profit of a single product, it said that it expects its Covid vaccine sales to generate a “20-something” percentage profit margin by 2021.

Although the country has signed a number of contracts with the government for 2022, the company will face increasingly fierce competition in the next few years, including competitors from Novavax that later enter the market.

There are signs that the Covid vaccine market is evolving to resemble the traditional U.S. drug market—pharmaceutical companies advertise heavily to attract patients and doctors—Pfizer and Moderna are hiring new employees to promote their vaccines. last month, Pfizer hired a salesperson To promote its booster, and Moderna is also expanding its US marketing team.

“As we move into the next few years, a large number of vaccines may be approved-GlaxoSmithKline, Sanofi and many other companies,” Conover said, noting that Pfizer will have difficulty raising prices significantly if it wants compete.

Vamil Divan, a senior healthcare analyst at Mizuho, ​​said: “Influenza vaccination is available every year, but only a few patients are vaccinated.” “A large part of the country has not yet been vaccinated, so when it becomes popular, the vaccination rate will be lower. [Sales] It will not be as we saw this year. “

He expects Pfizer’s Covid vaccine sales to reach 16.3 billion U.S. dollars next year, but will halve to 8.3 billion U.S. dollars by 2023, and drop to 2 billion U.S. dollars in 2024.

In addition, Pfizer’s patents for several of its best-selling drugs, including Ibrance and Eliquis, will expire in 2026 and 2027, which may further drag down overall revenue.

Pfizer stated that in its entire investment portfolio, it is expected to “grow an average of at least 6% per year by 2025 (including 2025).”

The company said: “Although our efforts in developing a Covid-19 vaccine may play a longer-term role in Pfizer’s growth, the company remains focused on providing positive clinical trial results for its late-stage pipeline opportunities.”

For Moderna, the upcoming revenue cliff will be even more obvious. Its Covid vaccine is the company’s only approved drug, and the success of this single product has pushed the biotech group’s market value to $175 billion.

A line chart showing the successful stock price (USD) of Moderna's Covid vaccine makes its stock price soar

Last week, the drugmaker announced a series of ambitious drug development plans using mRNA technology, hoping to use it to treat various diseases from cancer to heart disease. But most of its pipelines are still in the earliest stages of testing, and most experimental drugs have failed.

Hartaj Singh, senior biotechnology analyst at Oppenheimer, said: “One of their problems will be that investors will look for the next big thing.” “If their pan-breathing project does not start producing certain products within the 2024 time frame, You will start to see some pain in the stock price,” he said, referring to Moderna’s plan to develop a vaccine against a variety of respiratory diseases, including influenza. And Covid-19.

Moderna declined to comment on its valuation.

Singh said Moderna’s share price “may be cut in half” and compared it with the US drugmaker Gilead, which was approved for hepatitis C drug in 2015 — the first effective treatment for the disease method. After the patient completes the course of treatment, he no longer needs to take the drug, and the drug eventually faces fierce competition from competitors.

For pharmaceutical companies that rely heavily on single product sales, Gilead’s market value is currently US$90 billion, and its peak value of US$173 billion in 2015 has become a warning story.

A pharmaceutical investor said that the “same dynamics” that affected Gilead also played a role in the Covid vaccine market. “Once you get such a huge success from a single product, it will be very difficult. Wall Street is very cruel, they don’t give too much value because they think the duration is limited [on a product]. “

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