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Investors are starting to appreciate the business potential of vaccines

syringes containing the Covid-19 vaccine
Be ready for more shots.
  • Annalisa Merelli
By Annalisa Merelli

Senior reporter based in New York City

Published Last updated

The vaccine money is in—and it’s pretty good.

Pfizer reported revenue of $3.5 billion from its vaccine in the first quarter of 2021. Moderna sold $1.7 billion worth of vaccines in the same period, turning a profit for the first time in the company’s history. BioNTech, which is making the vaccine in partnership with Pfizer, expects $15 billion in vaccine sales this year (with an expected profit above 25%).

AstraZeneca and Johnson & Johnson, meanwhile, are providing the shots on a not-for-profit basis. But they have expressed the intention of revising up the cost of their vaccine once the pandemic phase of Covid-19 is over. Their first quarter revenue—they posted $275 million and $100 million respectively—suggests the vaccine will be a sizable business for both.

It hasn’t been the norm for the pharmaceutical industry to be making a remarkable profit from vaccines. Prior to Covid-19, vaccines had been the realm of just a handful of players. Merck, GSK, Sanofi, and Pfizer dominated a field that is difficult for new players to enter because of the investments required to guarantee manufacturing capacity.

The pandemic has been a once-in-a-century crisis that opened the door to disruption, and new players. But while it’s unlikely the vaccine industry will see more newcomers in the near future, investors are betting on an expansion of its scope.

Pfizer, Merck et al

Even with the scale of vaccines needed to fight the pandemic and the investment going into developing them, it was only two new companies that were able to make their debut in vaccine making, Moderna and BioNTech. In fact, considering BioNTech produced its vaccines with Pfizer, it’s really only Moderna that will emerge from Covid-19 as a new vaccine producer.

The company recently announced an investment to make 3 billion doses of its Covid-19 vaccine in 2022, and has other vaccines in the pipeline, too. If Moderna was able to enter the industry, it was very much due to unique a combination of factors, like the size of the crisis, big government investment that offset much of the research cost, and being the first in line with a vaccine candidate.

But the fact that new players are unlikely to enter the field doesn’t mean there won’t be more investments in vaccines—or more money to be made by the existing industry leaders. Quite the opposite, in fact.

A shot at everything

The race to develop the Covid-19 vaccine and the outstanding results Moderna and Pfizer achieved in terms of speed and efficacy have shown something pretty clearly: Vaccines can be done better than we have in the past.

This is true especially if we consider mRNA technology, which allows for vaccines to be made much more quickly. “Clearly, the mRNA technology has some intrinsic advantages over traditional protein and live attenuated vaccines—how quickly you can design it, how consistent the product is,” says Daniel Chancellor, an expert at Informa Pharma Intelligence, an analysis firm focusing on the pharmaceutical industry.

The kind of success such technology had with Covid-19 could quickly translate to the flu vaccine market. Flu vaccines would be designed closer to flu season, and have more accurate information on the strand of flu circulating in a given year. Therefore, the vaccine would have higher efficacy.

But more importantly, the mRNA technology is being tested against diseases we didn’t yet know we could treat through vaccines, for example, Cytomegalovirus (CMV), a common virus that can cause serious complications for a gestating baby if the mother contracts it while pregnant. Several strands of CMV are known, and the vaccine was designed to include six different antigen sequences. Earlier this year, Moderna announced it was pursuing a vaccine for HIV, a decades-long goal for the health community.

A bigger role in the pharma industry

Expanding the range of diseases that could be tackled through a vaccine would have an enormous impact on the pharmaceutical industry, introducing a better option than treatment: prevention. “The argument for preventing is so much stronger than for treating,” says Chancellor. The price of those vaccines would take into account not just the benefit to the patient, but also the savings to the health system by avoiding long and costly treatments. It would likely be profitable for vaccine makers even without the scale of a pandemic.

Ultimately, the pandemic will be responsible for the acceleration of the field. The companies profiting from Covid-19 vaccines, like Moderna, will invest big portions of what they made from them into further vaccine research and development.

Other big pharmaceutical companies will probably do the same, says Chancellor, and either start researching mRNA vaccines or partner with biotechnology companies. In the long run, the vaccine business will likely be dominated by the exact same leaders the industry has now—but with a larger market to make profits off.

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