(CNN Business) — The imminent authorization of Pfizer’s vaccine against covid-19 in the United States is a momentous occasion for science, the economy and humanity. This milestone is also a major source of money for the companies that developed the vaccines.
Wall Street analysts project that Pfizer and Moderna will generate $ 32 billion in revenue from the COVID-19 vaccine in the next year alone.
And this does not take into account the goodwill boost these companies will receive in helping to end the worst pandemic in a century. That momentum is magnified for Moderna, a young biotech company few had heard of prior to 2020 and which may now be on the verge of obtaining its own clearance from the U.S. Food and Drug Administration (FDA, for its acronym in English).
Pfizer alone is projected to generate $ 19 billion in revenue from COVID-19 vaccines in 2021, according to Morgan Stanley. That adds up to an estimated $ 975 million in vaccine revenue in 2020.
Pfizer will split its revenue with BioNTech, the German company with which it partnered to develop the vaccine. An FDA advisory panel recommended Thursday that the agency grant an emergency use authorization to the candidate vaccine that the pair of companies developed. US officials have said they are working “quickly” to give the vaccine the green light.
The UK has already licensed the Pfizer vaccine this month.
Pfizer and BioNTech Profits
Pfizer is expected to see an additional $ 9.3 billion in combined revenue from the COVID-19 vaccine in 2022 and 2023, as the world continues to get vaccinated against the virus, Morgan Stanley projected.
The advancement of the vaccine has not caused a boom in Pfizer’s stock price because the drugmaker is already a huge company. Pfizer shares are up just 12% this year, below the overall gain of 13.5% for the S&P 500.
Still, Pfizer’s expected revenue in 2021 would vastly exceed the company’s best-selling product last year: a pneumonia vaccine that generated $ 5.8 billion in sales.
While Pfizer’s shares have barely moved, those of its partner BioNTech are booming. Its US-listed stocks have soared nearly 300%. This brought the value of the German biotech company to nearly $ 30 billion.
Moderna had just $ 60 million in revenue last year
Meanwhile, Moderna’s candidate vaccine has already transformed a virtually unknown company into a $ 62 billion powerhouse. The shares have soared about 700% this year. And Morgan Stanley estimates that about half of the company’s market value is tied to the vaccine.
Moderna is expected to raise $ 13.2 billion in revenue from the COVID-19 vaccine next year, according to Goldman Sachs. Others are more optimistic. Morgan Stanley said Moderna’s meteoric share price means investors expect the company to raise between $ 10 billion and $ 15 billion from the sale of the Covid-19 vaccine in both 2021 and 2022, followed billions more in booster sales.
These are staggering sums for a company that generated just $ 60 million in sales in 2019 and had never licensed a product before.
“It’s epic,” said Alan Carr, a biotech analyst at Needham. He added that “it is a historic achievement in drug development.” “It’s hard to imagine taking a new technology in such a young company and having it ready just in time for the worst pandemic in a century,” he said.
Wall Street is very optimistic about Moderna’s portfolio
Both Pfizer and Moderna have published data indicating that their vaccines are very effective in preventing COVID-19, more than analysts had anticipated.
Investors believe the achievement validates Moderna’s mRNA technology, which seeks to harness normal biological processes to create a desired therapeutic effect. Wall Street now has much more confidence in the entire Moderna portfolio and is betting that this will not be the company’s only success.
Moderna’s coronavirus vaccine “demonstrated the technology to be safe and effective, unleashing the potential of other vaccines in the works,” Morgan Stanley analyst Matthew Harrison wrote in a recent note to clients.
More than a quarter of Moderna’s market value is now associated with its other mRNA vaccines, estimates Morgan Stanley.
Now, the big debate on Wall Street is how long the covid-19 vaccines will be a source of income for these companies. It is not yet known how long the treatments will provide protection and how often people will need to get booster shots.
Harrison said it will take at least a few years of follow-up data to understand how effective vaccination boosters are. During that time, public health officials are likely to encourage high-risk and elderly populations to receive them, he said.
The Debate About Profiting During a Health Crisis
Medical advances are likely to bring about a profound shift in the pandemic-damaged global economy, paving the way for the recovery of decimated airlines, hotels, casinos, restaurants and other sectors. Vaccines could eventually lead to the rehiring of millions of workers whose jobs were hurt during the health crisis.
Yet the tens of billions of dollars that Pfizer and Moderna can earn from vaccines have drawn criticism due to human suffering. The pandemic has killed nearly 300,000 people in the United States alone.
Rival drug makers Johnson & Johnson and AstraZeneca have promised their vaccines will be available non-profit during the pandemic.
“It is absolutely wrong for pharmaceutical companies like Pfizer and Moderna to benefit, and for their executives to make huge personal fortunes, from the COVID-19 vaccines that have been so heavily subsidized and supported by US taxpayers,” said Eli Zupnick, spokesman. Accountable.US, a progressive patient advocacy and advocacy group.
Neither Pfizer nor Moderna responded to requests for comment.
In a release Last month, Pfizer said that the development and manufacturing costs of the COVID-19 vaccine “have been completely self-financed, with billions of dollars already invested at risk.”
“The company will continue to bear all development and manufacturing costs in an effort to help find a solution to this pandemic as quickly as possible,” Pfizer said at the time.
The role of the federal government
Although Pfizer did not accept money from ‘Operation Warp Speed’, the Trump administration’s initiative to promote the vaccine, the federal government agreed to pay $ 1.95 billion for the first 100 million doses. That deal served as a kind of safety net for Pfizer, providing the company with a lucrative guaranteed market if the FDA approved the vaccine.
Moderna took advantage of the capital markets to raise funds. In May, the company raised $ 1.3 billion through the sale of shares. Some executives from Moderna cashed in tens of millions of dollars in shares through pre-programmed transactions that, however, generated disapproval among former officials of the Securities and Exchange Commission.
Moderna also took part of the taxpayer’s money to develop its vaccine. The federal government awarded Moderna about $ 955 million in grants designed to support the development of the medication. Moderna also worked closely with government scientists to test its vaccine.
Carr, the Needham analyst, said future revenues for Moderna and Pfizer were motivating factors that helped make medical breakthroughs possible.
“There is nothing like an income stream to incentivize them,” he said.
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