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The world has two, and possibly three, Covid-19 vaccines ready to ship before the end of the year. In several months, a significant portion of the world’s population will have received at least the first dose of the vaccine, meaning that the manufacturers – so far Pfizer, Moderna, and AstraZeneca – will have collectively sold billions of doses.
While these drug companies fulfill a desperate public need, they are also corporations whose shareholders expect a return. Manufacturing coronavirus vaccines is a potentially lucrative business, but how much will these companies make? And what will the market for Covid-19 vaccines look like in the long term?
starting price
Unlike most drugs, vaccines don’t make a big profit. The market is smaller, with fewer players. Before Covid-19, the global market for all vaccines was about $ 24 billion a year, just a very small fraction of the overall pharmaceutical market, with its estimated annual revenue of more than $ 1 trillion. Flu vaccines, for example, are a $ 4 billion market and Sanofi, the largest producer, sells about $ 1 billion per year.
In the case of a Covid-19 vaccine, there is significant public pressure to keep the cost as low as possible to make the vaccines accessible globally. That’s why pharmaceutical companies have committed to delivering the first million doses at discounted prices, from as low as $ 3 per dose (AstraZeneca) to $ 25 to $ 37 per dose (Moderna).
The prestige and brand benefit associated with a vaccine that ended the pandemic, while difficult to quantify its economic impact, would be significant. Drug manufacturers are not asking as much as they could for their vaccines, especially considering the enormous economic value attached to the end of the pandemic, because that prestige can very easily be lost if the vaccine is too expensive for people to buy or the governments.
With a larger market than the flu vaccine and a smaller profit margin (at least initially), annual revenue from the Covid-19 vaccine is projected to be $ 10 billion a year until the vaccine stops operating. be a public health hazard, which could only be a couple of years. By comparison, the drug company Merck makes more than $ 7 billion a year from the cancer drug Keytruda alone.
This kind of public pressure to keep prices low will likely subside once enough people have been vaccinated and the pandemic is over. We still don’t know what the post-pandemic period will look like. The virus may continue to circulate for a few years, during which the world will continue to need doses of the vaccine. Or, the immunity may last long enough and be strong enough to limit the circulation of the virus, thus reducing the need for a vaccine.
While pharmaceutical companies will not really be able to maximize their short-term profits, they could do so when Covid-19 is no longer causing a global pandemic, but before it has been fully eradicated. As long as that post-pandemic period lasts, paradoxically it will be easier for pharmaceutical companies to negotiate higher prices for their vaccines when they are not as essential to the functioning of the world. A lower dose requirement and much less public scrutiny will help ease the pressure to keep prices low. Therefore, in this period, brands of Covid-19 vaccines, regardless of their order of appearance on the market, could generate better margins and profits, even with a lower number of doses.
Offer and demand
Vaccine candidates that have so far been advertised as effective require different technologies, both for production and distribution. The Pfizer vaccine, for example, requires extremely cold storage temperatures (around -70 ° C or -94 ° F), while the Moderna vaccine requires only the very cold (-20 ° C or -4 ° F). The latter is easier to store in hospitals, for example.
But both need uninterrupted storage below freezing, which is not available in large parts of the world where there is a shortage of electricity and other necessary infrastructure. The AstraZeneca candidate, which doesn’t have such extreme temperature requirements, might be a better option in those situations. This means not only that multiple vaccine options are needed, but there will be a market for many of them.
According to Christopher Snyder, professor of economics at Dartmouth College and a fellow at Accelerating Health Technologies, a group focused on the financial and economic cases for vaccine development, there is a strong business case for companies to produce their vaccines, even if they are the fourth , fifth or sixth of the row.
The money invested in testing would pay off, as even a small slice of the market that is potentially as big as the entire world can still be profitable, even for sales as low as a couple of dollars a dose. “If you have the promise of a piece of the pandemic market and, of course, the post-pandemic market, you don’t have to have a large part of that to be worth it,” says Snyder.
Patents
However, there is another way that Pfizer and Moderna can make money from the vaccine, and it is not the vaccine itself. They are the patents on how they were made.
Vaccine patents last 20 years (minus the time needed to obtain approval for the use of vaccines) and, in most cases, large producers apply for them, as they do with other medicines, around the world, to prevent drug manufacturers in other countries. countries to produce the drug or vaccine without a license.
However, vaccine patents are not always so remunerative, explains Ana Santos Rutschman, a professor at the Saint Louis University Center for Health Law Studies.
A vaccine can have dozens of patents attached; the HPV vaccine, for example, has 81, he says. These are patents that cover everything from the formula to the method of administration., to the manufacturing process. But often when a new vaccine hits the market, there is little that has not been patented in the past. “There is not much intellectual property (intellectual property) left in vaccines,” says Santos Rutschman. Most vaccines are made in a similar way or rely on one of the few ways to trigger the immune response.
Formulas vary, of course, but in the case of Covid-19 vaccines, Santos Rutschman says, manufacturers have indicated that they will not enforce their patents on the formula. Even if they did, the vaccine will most likely only be useful for a couple of years after all.
But Moderna and Pfizer’s vaccines have one element that is far more important than the elements that make it effective specifically against Covid-19: the use of RNA messengers to trigger the immune response.
Investment in the development of the Covid-19 vaccine has fueled research on mRNA, and the vaccines are the first use of a completely new technology that could be used not only for other vaccines, but also for other types of treatments. This innovation used in vaccines is likely to be captured by various patents, although Santos Rutschman is careful to point out that there is no certainty about how drug companies will advance this until the information is public, and it could provide licensing revenue for a period of time. longer. time we will need Covid-19 vaccines. “The idea is that companies are not so concerned about the Covid-19 vaccine but about the trigger of the mechanism that makes it effective,” says Santos Rutschman.
