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By Michael Erman
NEW YORK, Aug 13 (Reuters) - Drugmakers Pfizer Inc, BioNTech
and Moderna Inc are expected to reap billions of dollars from
COVID-19 booster shots in a market that could rival the $6
billion in annual sales for flu vaccines for years to come,
analysts and healthcare investors say.
For several months, the companies have said they expect that
fully inoculated people will need an extra dose of their
vaccines to maintain protection over time and to fend off new
coronavirus variants.
Now a growing list of governments, including Chile, Germany
and Israel, have decided to offer booster doses to older
citizens or people with weak immune systems in the face of the
fast-spreading Delta variant. The UK and United States, among
many others, are expected to follow suit.
Pfizer, along with its German partner BioNTech
, and Moderna have together locked up over $60
billion in sales of the shots just in 2021 and 2022. The
agreements include supply of the initial two doses of their
vaccines as well as billions of dollars in potential boosters
for wealthy nations.
Going forward, analysts have forecast revenue of over $6.6
billion for the Pfizer/BioNTech shot and $7.6 billion for
Moderna in 2023, mostly from booster sales. They eventually see
the annual market settling at around $5 billion or higher, with
additional drugmakers competing for those sales.
The vaccine makers say that evidence of waning antibody
levels in vaccinated people after six months, as well as an
increasing rate of breakthrough infections in countries hit by
the Delta variant, support the need for booster shots.
Some early data suggests that the Moderna vaccine, which
delivers a higher dose at the outset, may be more durable than
Pfizer’s shot, but more research is needed to determine whether
that is influenced by the age or underlying health of the people
vaccinated.
As a result, it is far from clear how many people will need
boosters, and how often. The profit potential of booster shots
may be limited by the number of competitors who enter the
market. In addition, some scientists question whether there is
enough evidence that boosters are needed, particularly for
younger, healthy people. The World Health Organization has asked
governments to hold off on booster shots until more people
worldwide receive their initial doses.
"We don't know what the market forces will be," Moderna
President Stephen Hoge said in an interview last week. "At some
point, this will become a more traditional market - we'll look
at what are the populations at risk, what value are we creating,
and what are the number of products that serve that value. That
will ultimately impact price."
Pfizer declined to comment for the story. During the
company’s second-quarter earnings call, executives said they
believe a third dose will be necessary 6 to 8 months after
vaccination, and regularly afterward.
A MODEL IN FLU SHOTS
If regular COVID-19 boosters are needed among the general
population, the market would most resemble the flu shot
business, which distributes more than 600 million doses per
year. Four competitors split the U.S. flu market, which is the
most lucrative and accounts for around half the global revenue,
according to Dave Ross, an executive at CSL's flu vaccine unit
Seqirus.
Flu vaccination rates in developed countries have settled at
around 50% of the population, and COVID boosters would likely
follow a similar pattern if approved widely, said Atlantic
Equities analyst Steve Chesney.
Flu shots cost around $18 to $25 a dose, according to U.S.
government data and competition has kept price increases in
check, with producers raising prices 4 or 5 percent in 2021.
Pfizer and Moderna may have greater pricing power for their
boosters, at least at the outset, until competitors arrive.
Pfizer initially charged $19.50 per dose for its vaccine in the
United States and 19.50 euros for the European Union, but has
already raised those prices 24% and 25%, respectively, in
subsequent supply deals.
AstraZeneca Plc and Johnson & Johnson are
both gathering additional data on boosters of their vaccines.
Novavax, Curevac, and Sanofi could also potentially be used as
boosters, though their vaccines have yet to receive any
regulatory authorization.
"A lot of these firms aren't even in the market yet. I think
within a year's time, all these companies will have booster
strategies," said Morningstar analyst Damien Conover, who covers
Pfizer.
Mizuho Securities analyst Vamil Divan expects at least 5
players in the COVID-19 booster market within a few years.
There's still a lot of uncertainty around how boosters would
be rolled out in the United States. Still, it is possible or
even likely that people will be boosted with different vaccines
than they were originally vaccinated with. The National
Institute of Allergy and Infectious Diseases is already testing
mixed boosting, and other countries that have used so-called mix
and match vaccination have not had problems with that strategy.
One factor that could curb prices is if the U.S. government
continues paying for most or all of the shots administered in
the country, rather than leave it in the hands of private health
insurers. In that scenario, the government would still be
negotiating prices directly with vaccine makers, and could use
its buying power to stave off price increases.
Bijan Salehizadeh, managing director at healthcare
investment firm Navimed Capital, said the U.S. government is
likely going to want to keep paying in order to keep vaccination
rates high and prevent new COVID surges, particularly if a
Democratic administration is still in power.
"It's going to be paid for until the virus disappears or
mutates to be less virulent," Salehizadeh said.
(Reporting by Michael Erman, Additional reporting by Julie
Steenhuysen in Chicago and Carl O'Donnell in New York; Editing
by Michele Gershberg and Nick Zieminski)
