It was a little more than a month ago, at the virtual BIO conference, that Pfizer’s chief business officer John Young said the company wasn’t thinking about a return on investment for its rapidly developed 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-partnered vaccine and scored a $1.95 billion supply deal with the U.S. government, Pfizer seems to be changing its tune.
CEO Albert Bourla said earlier this week that he doesn’t agree with pharma critics who say COVID-19 vaccine developers should forgo profits on products they make to address the crisis.
“You need to be very fanatic and radical to say something like that right now,” he told Barron’s. “Who is finding the solution? The private sector,” he added.
A spokesperson for Pfizer pointed out that the company will only get paid by the government upon the successful delivery of a vaccine. "From the beginning we have been investing at risk," she said. "And we have said we intend to invest more than $1 billion in development and manufacturing in 2020."
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Pfizer’s latest comments come amid a growing debate about whether biopharma companies deserve to profit from the products they’re developing to end the COVID-19 pandemic. Both Johnson & Johnson and AstraZeneca have vowed to take a not-for-profit approach to pricing their vaccines, at least during the pandemic, but others—Pfizer among them—have stopped short of echoing that pledge.
Indeed, Pfizer is far from the only company under the spotlight for its COVID-19 vaccine pricing strategy. Moderna—which has taken federal funding to support R&D—may 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 prompted one U.S. representative to blast the company for pursuing “sky-high profits.”
Bourla said recently that Pfizer was aiming for a “marginal profit” on 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, Barron’s analysts calculated. That’s about as much as Pfizer’s best-selling cholesterol drug Lipitor hauled in at its peak.
Granted, Pfizer did not take federal funding for the development work on the COVID-19 vaccine, and Young pointed out at BIO that it needs to “to more than double down” on supply chain spending and “make significant investments of capital, as well as investments in … some very specialized raw materials.”
Nevertheless, the company could pull off a “decent” profit margin on the COVID-19 vaccine of 60% to 80%, said SVB Leerink analyst Geoffrey Porges in a recent note to investors.
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Pfizer expects to change its pricing strategy as the COVID-19 pandemic evolves, company executives explained during the second-quarter earnings conference call Tuesday. They predicted that mass vaccinations at the $19.50 price point would continue into early 2022 in the U.S. and other developed countries, said Angela Hwang, group president of Pfizer Biopharmaceuticals. During the next phase, patients may need repeat vaccinations, at which point the company will take a “value-based” approach to pricing.
Meanwhile, COVID-19 vaccine partners Sanofi and GlaxoSmithKline are starting to fall in line with the no-profit camp. They signed an agreement with the U.K. government Wednesday 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 journalists that there would be no profits—at least not in the short term.
“We’ve been very clear from the beginning that we don’t expect to profit from these partnerships during the pandemic phase,” she said, as quoted by Barron’s. “We’ll be reinvesting any short-term profits in pandemic preparedness.”