Vaccines are set to become a big business for Kovid-19. Their ability to generate staggering revenue has already added billions of dollars to the market value of drug makers such as Pfizer and Modern
The promise is also attracting scrutiny in Washington.
The cost of prescription-drugs is one of the few issues where Democrats and Republicans can find common ground. This is a risk for pharmaceutical companies, and one that weighs on their share prices.
The Kovid-19 epidemic in Washington discussed drug-pricing. But there are indications that the issue may be revived this week such as Pfizer (ticker: PFE) and AstraZeneca (AZN) unveiling promising data on their vaccines.
How drug makers play the moment can affect the long-term value of companies. A mispronunciation on vaccine pricing can make a push to limit drug prices.
“We continue to press on this issue and need, as much as we can, oversight”. Jan Skakowski, an Illinois Democrat. It has pushed companies that have received research and development support to not take advantage of the government and their vaccines. “They boast about how much money they are spending on research and development, how much everything costs and there is no documentation.”
In a hearing on Tuesday, it asked pharma officials if they would commit to selling their vaccines at a cost.
Modern (mRNA) president Drs. “We will not sell it at no cost, no, ma’am,” said Stephen Hoge, whose vaccine is being developed in collaboration with the National Institutes of Health and received up to $ 483 million. In funding from another federal agency.
(MRK) representative in the hearing Dr. Hoag echoed, while Johnson & Johnson (JNJ) and AstraZeneca (AZN) officials said they would not make a profit on at least some sales of their Kovid-19 vaccine.
But, Congressmen said Baron, is “We have seen repeatedly that Big Pharma companies have taken advantage of the conditions.”
The next day of the subcommittee hearing, Pfizer and its partner Biotech (BNTT), which is the only one among the leading Kovid-19 vaccine developers not to receive federal funds, announced a deal to sell 100 million doses of the vaccine to the US government . $ 1.95 billion, effectively setting a price for the vaccine at $ 19.50 per dose. The vaccine will likely be delivered as a two-dose diet, specifically costing the government $ 39 per patient. (If the vaccine is not approved, Pfizer will not receive anything.)
The price was higher than some analysts had expected. In June, Pfizer CEO Albert Borla said a price would be in the range of “other vaccines that already exist in the market”. Mizuho analyst Wamil Dewan said that the value of the vaccine would be $ 15, depending on the range of prices the government would pay for the vaccine.
Neither the government nor Pfizer have said how this $ 19.50 price tag came about. “Must be part of a national discussion,” Dr. Says Steven Pearson, president of the Institute for Clinical and Economic Review, an influential group that makes drug-pricing recommendations. “Their approach to thinking what is a fair price, what is their paradigm?”
In an interview with Marketwatch, the director of the National Institute of Allergy and Infectious Diseases, Dr. Anthony Fauci said he did not object to companies making profits from their Kovid-19 vaccines.
If the price of $ 19.50 sticks a dose, the sale can be very high. Pfizer says it expects to make more than 1.3 billion doses by the end of 2021, which could mean $ 25 billion in sales. After BioNTech halved, Pfizer would cost about $ 13 billion – nearly the same amount that Lipitor, its all-time best-selling drug, sold in its best year ever. As a benefit, Pfizer has stated that it plans to earn one, although its cost basis is unknown. The company says it plans to spend $ 1 billion in developing and manufacturing the vaccine this year, but has not made estimates for 2021.
Still, it is unclear how long any sales boom will last. “We just don’t know how well a competitor is going to come in the market, and I think, most importantly, how does this epidemic play out?” Says the Diwan of Mizu. If people need regular booster shots to maintain their safety, the vaccine can draw in regular revenue for years to come. If not, the sale may dry up in a few years.
Dewan likened the situation to that which occurred a decade and a half ago, when Gilead Sciences (GILD) introduced a new generation of hepatitis C antivirals. Gilead sold $ 13.9 billion of its hepatitis C antiviral Harvoni in 2015 and effectively eradicated the disease. By 2019, Harvoni sales had fallen to $ 643 million.
The revenue that Pfizer and other Covid-19 vaccine developers receive, amid an epidemic and recession, will undoubtedly attract attention. How can companies determine the price of their vaccines as to what happens next.
“I think they feel that a lot of attention has been paid to them right now,” Diwan says. “They are trying to do the right thing about prices, but part of it is that they don’t want to move forward … when things usually go down in favor of pricing.”
Write Josh Nathan-Kazis at [email protected]