Rapid testing of the BinaxNow Ag Card from Abbott Laboratories at a test site in San Francisco, CA. Abbott reported $7.7 billion in sales of its Covid-19 tests last year. Bloomberg
Healthcare companies that have developed effective vaccines, treatments and tests for Covid-19 are seeing a huge financial payoff and are starting to spend their money, while wondering if the growth is sustainable.
Companies such as Pfizer Inc. and Moderna Inc. have so far reported at least $79 billion in combined global sales of Covid-19 vaccines and treatments for 2021, according to a the wall street journal review of latest results reports.
Diagnostics sales have also been strong for companies like Abbott Laboratories, which made $7.7 billion in sales of Covid-19 tests last year.
This is a market that did not exist before the pandemic. Many companies tried to come up with pandemic countermeasures in 2020, but only some succeeded.
Sales of the resulting products kicked into high gear in 2021, bolstering profits while adding to cash reserves.
Some companies invest windfall gains in employee bonuses, stock buybacks, internal research efforts to develop new drugs and vaccines, or pursue acquisitions of other companies to strengthen research and development pipelines.
But sales are already down for some drugs that are less effective against newer variants of the coronavirus, including products from Eli Lilly & Co. and Regeneron Pharmaceuticals Inc.
Some treatments are likely to be superseded by newer antiviral pills.
Diagnostics makers are cautious about sales expectations this year as demand has been hard to predict as increases in coronavirus cases give way to lulls. Demand for Covid-19 tests in the United States has fallen as the wave of Omicron variants dissipates.
Public health and patient advocates have accused companies of profiting during the deadly pandemic. They said companies should do more to expand access to Covid vaccines and treatments around the world, such as sharing vaccine manufacturing technology to supply low-income countries.
A Pfizer spokeswoman said the company has provided 1.2 billion doses of vaccines to low- and middle-income countries at not-for-profit prices, and expects to have delivered a total of two billion doses to those. country by the end of 2022.
Moderna Chief Executive Stephane Bancel noted that the company had never launched a product before the pandemic and said it had invested several billion dollars in increasing vaccine manufacturing capacity.
The company has also pledged to provide up to 650 million doses to the Covax initiative which provides vaccines to low-income countries.
Forecasts from companies and Wall Street analysts point to at least $90 billion in combined drug and vaccine sales for the year 2022, a Newspaper review found.
Last week, Moderna reported $17.7 billion in sales of its Covid-19 Spikevax vaccine for 2021, and predicted it would generate at least $19 billion in Covid vaccine sales this year.
For Moderna, which had no marketed product before the pandemic, the vaccine was transformational, pushing it into the front ranks of the biopharmaceutical industry.
The Cambridge, Mass.-based company gave upper- and lower-level employees a one-time bonus in January. And it’s using the proceeds from its vaccines to double its research and development spending, pursue acquisitions and licensing deals, and increase its stock buyback program.
The company is developing a combined flu and Covid vaccine, and testing experimental vaccines against other viruses in late-stage studies.
“What you’re going to see is really a huge pipeline expansion,” Bancel said in an interview. “Money is one thing we lacked to scale this platform and now we have it. So we will invest as much as we can.”
Moderna now has about $17.6 billion in cash, cash equivalents and investments, about 13 times the amount it had before the pandemic. Its workforce has more than doubled from a year ago to reach 3,000 employees.
New York-based Pfizer, already one of the biggest pharmaceutical companies before the pandemic, reported $36.8 billion in global sales for its Covid-19 vaccine, Comirnaty, in 2021, the highest tally on a year for a pharmaceutical history.
Pfizer co-developed the vaccine with BioNTech SE.
And Pfizer recently introduced the antiviral pill Paxlovid, which showed strong efficacy in clinical trials.
Pfizer expects combined sales of these Covid products of at least $54 billion for 2022 — an amount that exceeds the total revenues of most other drugmakers.
Expected Covid-19 sales could push Pfizer’s total sales to more than $100 billion for the first time in its history. Some analysts say Pfizer could beat forecasts for Covid and overall revenue.
“It’s almost another Pfizer that you add on top of Pfizer,” said Vamil Divan, analyst at Mizuho Americas.
Pfizer used part of its windfall to reward its employees.
The company said it was offering a one-time Covid-19 bonus to employees who are not normally eligible for bonuses.
And Pfizer plans to use the influx of cash for acquisitions and licensing deals, focusing on adding drugs in areas including oncology, immunology and rare diseases.
The company faces declines in some non-Covid products later this decade due to expiring patents, so striking deals would help Pfizer replace that revenue.
“Acquisitions are obviously very much in the cards, but so are strategic partnerships and alliances,” Pfizer CEO Albert Bourla said during the company’s earnings call in early February.
The Covid revenue outlook is uncertain for some companies.
If the pandemic goes into an endemic phase, companies could sell fewer doses of drugs and vaccines, but could raise prices to compensate for that, Bernstein analyst Ronny Gal said.
He said companies are asking, “How can we turn this into a continuous business, and how big will it be?”
Some manufacturers of the first treatments against Covid-19, monoclonal antibodies, are experiencing declines. The use of antibodies from Lilly and Regeneron has been restricted in the United States because they have lost their effectiveness against the Omicron virus variant.
The difficulty of predicting what lies ahead in the pandemic has led some companies to present various scenarios to investors.
Executives at Swiss maker of Covid diagnostics and treatments Roche Holding AG said one scenario is that variants continue to cause waves of new infections and reinfections through 2023.
But they said the most likely scenario is that immunity from vaccines and infections provides long-lasting protection, lasting at least four years. Sales of Roche Covid products would be lower in this scenario.
Not all Covid product sales are very profitable.
GlaxoSmithKline PLC’s Xevudy antibody treatment is one of the few that works against Omicron, so it has been requested.
But Glaxo warned that its success would dampen profit growth as it is a low-margin product for them.
Xevudy earned nearly £1 billion, or $1.36 billion, for Glaxo in 2021, and was responsible for the majority of the UK company’s revenue growth.
AstraZeneca’s Covid-19 vaccine was its second biggest seller in 2021, with $4.1 billion in revenue. But the company pledged to sell the shot at cost in the pandemic emergency and so made little profit.
The company lost money on the vaccine in the first half of the year and has made only a negligible profit since.
AstraZeneca says it will now sell it for a profit in select markets.
