As Delta spreads, Pfizer and Moderna get set for a booster shot to profits

Praised for preventing hundreds of thousands of deaths and allowing a return to more normal life, Covid vaccines will also substantially benefit some pharmaceutical companies.

In June, analysts estimated the global market for the vaccines could be worth $70bn (£50bn) this year, but the figure could be even higher as the Delta variant of coronavirus spreads and scientists debate whether people will need booster shots.

On Thursday Moderna, which received US government funding to develop its vaccine, will reveal how much it made in the second quarter. It forecast 2021 revenues of $19.2bn from the vaccine in May, but that estimate could rise this week.

With fellow US company Pfizer it will take the lion’s share of global Covid vaccine profits. The firms are charging $30-plus a person for the required two shots in Europe and the US, while Britain’s biggest drugmaker, AstraZeneca, and the US’s Johnson & Johnson (J&J) have pledged to provide theirs on a not-for-profit basis until the pandemic ends.

New York-based Pfizer made $11.3bn in the first half of this year from the Covid jab it developed with Germany’s BioNTech, and last week lifted its 2021 sales forecast for it to $33.5bn from $26bn. The two companies have tweaked their mRNA vaccine to target the Delta variant and will begin testing it on humans this month.

Pfizer’s total sales surged 86% in the second quarter, but were only up by 10% when Covid vaccine sales are stripped out. Morningstar analyst Damien Conover said sales growth would slow over the next 12 months as vaccine demand shifted towards emerging markets where pricing was lower: “Longer term, we expect … sales of close to $2bn annually based on booster shots for the elderly and immuno-compromised. Potential upside exists if larger demand for boosters emerges or new vaccines are developed for variants.”

The vaccine has also transformed the fortunes of Moderna, a Massachusetts biotech firm founded in 2010, which made its first quarterly profit thanks to $1.7bn revenues in the first three months of the year.

The two companies’ commercial success contrasts with the not-for-profit route taken by AstraZeneca and J&J, which are selling their jabs for far less (AstraZeneca charges between $4.30 and $10 for two doses while J&J has charged the US government $10 per dose for its single-shot vaccine).

Even so, the jab developed by Oxford University and AstraZeneca brought in $1.2bn for the pharma company in the first half of the year.

One of the first vaccines to be approved globally it is now being shipped around the world – sales were almost evenly split between Europe and emerging economies in the first half.

Despite leading vaccine production globally, the US has exported few shots. While there is no formal export ban, Washington has used a wartime power known as the Defense Production Act to require companies to fulfil its orders before any others.

However in June, US president Joe Biden announced that the US would donate half a billion Pfizer vaccines to 92 low- and lower-middle-income countries and the African Union, to “supercharge the global fight against the pandemic”. As part of that pledge, nearly 5.7 million Pfizer doses are set to arrive in South Africa this week, and 4 million are bound for Nigeria.

Only 14.4% of the world population is fully vaccinated; 28% has received at least one dose of a vaccine, with 4.07 billion doses given globally. Only 1.1% of people in low-income countries have received at least one dose.

AstraZeneca has suffered many setbacks, including supply problems which led to a court battle with the European Commission, and a link with rare blood clots (even though a new study last week indicated that its vaccine safety profile is similar to that of the Pfizer jab). It has postponed its filing for regulatory approval in the US to the second half of the year because, it said, it took time to put together the large datasets required by the US regulator.

The EU will not order any more vaccines from AstraZeneca, and disillusionment has set in. It is known to be considering “all options” for the vaccine business, including a potential sale by the end of this year.

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