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Market Insights

Pfizer: pandemic to endemic

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Pfizer spent a lot of this past year in the Covid headlines. Their collaboration with BioNTech has produced over 2 billion vaccine doses so far and they expect to produce a further 4 billion doses in 2022

The Covid-19 vaccine generated $13 billion of sales in the third quarter alone. That brings the total so far to $24.3 billion & Pfizer expects that total to reach $36 billion by the end of 2021. And we can see what this has done for the share price:

Pfizer: Pandemic To Endemic

It’s a trade that makes complete sense. You won’t find too many who can argue against “Go long the company making the most vaccines during a pandemic”...

Where next?

Based on contracts already signed Pfizer expects $29 billion revenue from the Covid vaccine in 2022. The eagle-eyed among you may spot a disconnect here. Pfizer is projecting far higher production, yet revenues will be less. How can that be?

The outlook depends on a few factors:

  • How many new contracts will be signed
  • More sales to lower-income countries
  • The new variant(s)

New contracts might be coming from the US government. CEO Albert Burla said:

"As long as the government thinks they should be going with mass vaccinations that they buy and distribute, we will support them,"

Of course they will! $$$!

Yesterday, the European commission agreed the purchase of an additional 20 million doses and activated a first option to order over 200 million doses from BioNTech-Pfizer, with delivery to take place from Q2 2022.

Many lower income countries and emerging economies still have relatively low vaccination rates, so there’s plenty of business to be done. Can Pfizer maintain the same kind of profit margins?

The Peoples Vaccine Alliance (80 members including the African Alliance, Global Justice Now, Oxfam, and UNAIDS) wants to make it more of a charitable endeavour.

The Alliance estimates that Pfizer, BioNTech and Moderna will make pre-tax profits of $34 billion this year and highlight the amounts as:

  • $1,000+ a second
  • $65,000 a minute
  • $93.5 million a day

The Alliance is calling for the pharmaceutical corporations to immediately suspend intellectual property rights for COVID-19 vaccines, tests, treatments, and other medical tools by agreeing to the proposed waiver of the TRIPS Agreement at the World Trade Organisation.

A full retreat is unlikely, although some kind of concession might need to be made…

The big WHAT IF?

What if… the omicron variant is the beginning of the end…? From pandemic to endemic?

A recent study from Hong Kong University showed that the Omicron infection in the lung is significantly lower than the original SARS-CoV-2, which may be an indicator of lower disease severity. The research is currently under peer review for publication, so it’s too early to draw definitive conclusions.

Even so, Nanette Cocero, global president of Pfizer Vaccines said on Friday:

“We believe Covid will transition to an endemic state, potentially by 2024,” while chief scientific officer Mikael Dolsten said “It seems like over the next year or two, some regions will transition to an endemic model while other regions will continue in pandemic mode,”

If this winter is set to be the last hurrah for Covid as a severe disease, attention will shift to the next story for Pfizer.

pfizer chart

This has been a particularly purple patch for the company, and may well lead to bigger and better things. On the other hand, it could also mean a return to the pre-pandemic trend, and potentially pre-pandemic pricingtoo. Pre-Covid, Pfizer’s highest price was the $43.96 high posted in 2018.

Not investment advice. Past performance does not guarantee or predict future performance.

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This page/website is not directed to EU clients and falls outside the European regulatory framework and is not in the scope of (among others) the Markets in Financial Instruments Directive (MiFID) II.
By continuing you acknowledge to view the content provided by Skilling (Seychelles) Limited, which is authorised and regulated by Seychelles Financial Supervisory Authority, and that your decision was made independently and at your exclusive initiative and no solicitation or recommendation has been made by Skilling or any other entity within the group.

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Important notice

This page/website is not directed to EU clients and falls outside the European regulatory framework and is not in the scope of (among others) the Markets in Financial Instruments Directive (MiFID) II.
By continuing you acknowledge to view the content provided by Skilling (Seychelles) Limited, which is authorised and regulated by Seychelles Financial Supervisory Authority, and that your decision was made independently and at your exclusive initiative and no solicitation or recommendation has been made by Skilling or any other entity within the group.

Continue