Pfizer invests $100 billion in COVID profits into developing and commercializing more drugs
Pfizer raised nearly $100 billion from the sale of COVID-19 vaccines and treatments to US taxpayers and foreign governments - now it plans to get rich, investing the money in developing and commercializing lucrative drugs for everything from obesity to 'migraine.
For drugmaker Pfizer, a fortune amassed in the COVID-19 pandemic is now paving the way for pharmaceutical nirvana: a diet pill worth billions.
The company has raised nearly $100 billion from the sale of COVID-19 vaccines and treatments to US taxpayers and foreign governments.
With that windfall, he plans to become richer, investing the money in developing and marketing potential blockbusters for conditions like migraines, ulcerative colitis, prostate cancer, sickle cell disease, and obesity.
It just announced it will triple or even quadruple the price of its COVID-19 vaccine once it hits the commercial market next year. Meanwhile, the company is flooding doctors and pharmacists - and consumers - with advertisements advertising its COVID-19 drug Paxlovid.
“Pfizer is an amazing marketing machine. They have an incredible ability to get the most out of molecules and get them adopted,” said Timothy Calkins, a marketing professor at Northwestern University's Kellogg School of Management.
The federal government is helping Pfizer with its marketing, urging people to get boosters targeted at Omicron variants, though the first data were conflicting about whether the shots work better than the previous version.
But even with a 66% drop in COVID-19 vaccine sales in the recent quarter, the company made about $4,4 billion in those three months. Pfizer has a deep flow of cash to fund its future. COVID-19 has been very good for business.
The company seems very excited -- judging by its messages to investors -- for two experimental diabetes pills, "me too" drugs in the class known as GLP-1 agonists. As Pfizer's competitors have already discovered, they double as weight-loss drugs.
In a study, more than half of obese patients treated with a high dose of injectable Eli Lilly and Co. lost a fifth of their body weight, findings that have raised the drugs' prestige as a dietary aid in Hollywood, Silicon Valley and other social niches . where cost is not a problem and being thin is always in fashion.
Wall Street analysts expect such massive demand for these drugs that Pfizer "may find a place there with marketing" if its version works, even if it's at least two years away from licensing, said Mohit Bansal, analyst at Wells Fargo.
By 2035, the Lilly drug alone could make $100 billion a year for its formulation, according to an analysis by Bank of America.
Pfizer still sees COVID-19 as a long-term 'multibillion-dollar franchise', chief financial officer said David Denton at a November 1 earnings call , since COVID-19 "will be a bit like a flu, a protracted flu, but actually more deadly than the flu.
The company announced Oct. 20 that it would charge $110 to $130 a shot once government contracts expire next year, more than double what investors had expected. The US government paid $30,50 per shot in its latest contract with Pfizer, according to Zaid Rizvi, a researcher at advocacy group Public Citizen.
Pfizer has been a good citizen in keeping prices low during the worst of the pandemic, CEO Albert Bourla told investors. Now taxpayers will reap the extra cost, while consumers "wouldn't see the difference" because there is generally no copay for vaccines.
Still, unless the new mutations are dangerous enough to scare enough people away, Wall Street analysts expect sales to slow as the public loses interest, Republican politicians discourage booster injections and worries continue. for the rare heart damage in young people who receive the injections.
Pfizer said in July it had requested "a $450 million write-off of inventory related to covid-19 products" that has exceeded its "approved shelf lives". And Moderna on Nov. 3 lowered its sales forecasts for its COVID-19 vaccine.
"Not many people are going to go out and get their fourth, fifth and sixth boosters unless there's a major new variant," said Geoff Meacham, an analyst at Bank of America. “If you've had the two mRNAs and a booster, you're pretty well protected. Do you need it every year?
This lackluster interest in COVID-19 products has prompted investors to push Pfizer to show where it can make revenue for three bestsellers: the breast cancer drug Ibrance, the rheumatoid arthritis drug Xeljanz, and Eliquis, a blood thinner, i whose patents expire in this decade.
While conducting its own research, Pfizer has fattened its development portfolio over the past two years by buying companies that had already developed promising drugs. The company hopes these purchases, and its own work, will provide it with $25 billion in new annual revenue by 2030.
Meanwhile, the company has offered investors $25 billion in dividends over the past three years and has spent $9 billion boosting stock prices with share buybacks.
This is all due to the huge profit increase from its COVID-19 products, which has allowed Pfizer to overtake Johnson & Johnson as the biggest earner in the industry so far in 2022.
From late 2020 through September, Pfizer earned about $80 billion from sales of $3,8 billion of COVID-19 and Paxlovid vaccines, and the company expects another $15 billion in the remainder of the year.
Until recently, investors had predicted that number would drop to about $11 billion a year by 2026, but Pfizer's recent trade pricing announcement has bumped that figure, potentially, to $3 billion, according to an analysis by Wells Fargo.
However, “from an investor perspective, the focus isn't so much on covid at this point. The goal is: what do they do with this money and these skills? Bansal said, and how to "use it to grow your core business."
To grow that core, Pfizer has acquired several midsize companies with promising or licensed drugs since last year. He spent $11,6 billion for Biohaven , whose migraine drug Nurtec ODT brought in $324 million in the first half of 2022. Pfizer expects up to $6 billion in annual drug revenue.
His hopes are also high for Oxbryta, a sickle cell disease drug manufactured by Global Blood Therapeutics, which Pfizer bought for $5,4 billion .
Priced at $125.000 annually, the drug, which raises levels of oxygen in patients, it made $100 million in the first two quarters of the year, but it could be worth it $2,5 billion annually with a powerful marketing engine behind it, according to Wall Street analysts.
Pfizer is strengthening its franchise in vaccines and respiratory treatments, Dr. Mikael Dolsten, chief scientific officer, said on the Nov. 1 call.
It is competing against GSK and Moderna to be the first to license a vaccine that protects the elderly, pregnant women and their newborns from RSV, a respiratory virus that swept children's hospitals this fall.
The company also released an updated version of its bacterial pneumonia vaccine, which brought in $5,3 billion in 2021.
The other mRNA vaccine companies are also making money but have narrower strategies. Moderna is testing 32 vaccines against infectious diseases and is developing an individualized long-term cancer vaccine. Pfizer's German partner BioNTech, which did most of the original development of their COVID-19 vaccine, has a similar goal.
Pfizer and Moderna both began advanced clinical trials this year for their first non-COVID-19 mRNA vaccines against the flu. If flu season is widespread enough, tests could show whether the vaccines are better than standard flu shots and whether one works better than the other.
Investors are expecting a lot from Pfizer, with its 80.000 employees and $81 billion in revenue in 2021. And they'll probably get it.
Nurtec, the migraine drug acquired with Biohaven, will be a good test case. Pfizer and giants like it each have at least 2.000 sales reps marketing to primary care physicians in the United States, Calkins said. Such an operation probably costs $400 million a year, he said, far more than a company like Biohaven could afford.
Pfizer will use its marketing prowess, particularly among primary care physicians, to "build the world's leading migraine franchise," CEO Bourla said on the Nov. 1 call.
Pfizer has the resources to flood the media with direct-to-consumer ads and negotiate with insurers and drug benefit managers to make sure patients can get this and other drugs, said Bansal, an analyst at Wells Fargo.
Sickle cell patients are harder to reach, but Pfizer "has reports in the hospital setting, the brunt of their investment in commercialization" to boost Oxbryta sales, said Evan Seigerman, research analyst at BMO Capital Markets.
Pfizer also plans to make a blockbuster of etrasimod, an experimental ulcerative colitis drug that it acquired in its $6,7 billion purchase of Arena Pharmaceuticals.
Pfizer's GLP-1 formulation is key to achieving its goals. GLP-1 drugs are similar to an intestinal peptide, or small protein, that stimulates biochemical pathways that help release insulin, decrease appetite and lower some immune responses.
While the drugs have been invented and licensed to fight type 2 diabetes, the FDA has also approved one for the treatment of obesity, and companies are testing formulations of GLP-1 against fatty liver disease, sleep apnea, kidney disease, congestive heart failure and even Alzheimer e Parkinson .
Pfizer executives they said they hoped to decide by 2024 which of the two drug candidates to bring into large clinical trials. The company aims to find a niche with a pill that can be taken with or without food, according to Dolsten. Most of the current products are injectables, which turns many people off.
Assuming one of the drugs gets licensed, marketing will do the rest.