Just over a month ago, at the BIO virtual conference, Pfizer Commercial Director John Young said the company was not thinking of a return on investment for its rapidly developing COVID-19 vaccine. Instead, he said, “finding medical solutions to this crisis” was a Pfizer priority.
But now that the company has moved into Phase 3 trials of its BioNTech-associated vaccine and has entered into a $ 1.95 billion supply agreement with the US government, Pfizer appears to be changing its tune.
CEO Albert Bourla said earlier this week that he disagrees with pharmaceutical critics who say developers of COVID-19 vaccines should give up profits on the products they manufacture to address the crisis.
“You have to be very fanatical and radical to say something like this right now,” he told Barron’s. Who is finding the solution? The private sector, “he added.
A Pfizer spokesperson noted that the government will only pay the company after the successful delivery of a vaccine. “From the beginning we have been investing at risk,” he said. “And we have said that we intend to invest more than $ 1 billion in development and manufacturing in 2020.”
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Pfizer’s latest comments come amid growing debate over whether biopharmaceutical companies deserve to benefit from the products they are developing to end the COVID-19 pandemic. Both Johnson & Johnson and AstraZeneca have promised to take a nonprofit approach to pricing their vaccines, at least during the pandemic, but others, including Pfizer, have not echoed that promise.
In fact, Pfizer is far from the only company under the spotlight for its COVID-19 vaccine pricing strategy. Moderna, which has received federal funds to support R&D, can price its vaccines between $ 50 and $ 60 per course, according to unconfirmed reports that emerged earlier this week. That would translate to up to $ 30 per shot, a price that led a US representative to criticize the company for seeking “towering profits.”
Bourla recently said Pfizer pointed to a “marginal benefit” in its vaccine. But under the U.S. government deal, 1.3 billion doses priced at $ 19.50 each would translate to a whopping $ 13 billion in sales for Pfizer, after the BioNTech split, analysts calculated. Barron’s. That’s almost the same as Pfizer’s best-selling cholesterol medication, Lipitor, peaked.
Of course, Pfizer did not receive federal funding for COVID-19 vaccine development work, and Young told BIO that he needs to “more than double” spending on the supply chain and “make significant capital investments as well.” as investments in … some very specialized raw materials. “
However, the company could achieve a “decent” profit margin on the COVID-19 vaccine of 60% to 80%, SVB analyst Leerink Geoffrey Porges said in a recent note to investors.
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Pfizer hopes to change its pricing strategy as the COVID-19 pandemic evolves, company executives explained during Tuesday’s second-quarter earnings conference call. They predicted that the mass vaccines priced at $ 19.50 would continue until early 2022 in the United States and other developed countries, said Angela Hwang, chair of the Pfizer Biopharmaceuticals group. During the next phase, patients may need repeated vaccinations, at which point the company will adopt a “value-based” pricing approach.
Meanwhile, vaccine partners COVID-19 Sanofi and GlaxoSmithKline are beginning to line up with the nonprofit camp. On Wednesday they signed an agreement with the UK government to supply 60 million doses of their vaccine. The financial terms of the pact were not disclosed, but GSK chief Emma Walmsley made it clear to reporters that there would be no profit, at least in the short term.
“We have been very clear from the beginning that we do not expect to benefit from these partnerships during the pandemic phase,” he said, as quoted by Barron’s. “We will reinvest any short-term gains in preparing for a pandemic.”
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