How Much Money Do Pharmaceutical Companies Really Make From COVID-19 Vaccines?

The COVID-19 pandemic led to widespread effects across the world, leading not only to economic challenges but also to advancements in medicine and pharmaceutical development. One particular area that has been influenced by this was vaccine development. Many companies successfully produced and distributed vaccines across the world, and the process continues, as more vaccines enter the market and the need for them across the world, especially in countries beyond the United States remains.

Currently, there are several vaccines out on the market. Only three vaccines were approved by the Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) for Emergency Use Authorization (EUA) in the U.S., which were manufactured by Pfizer/BioNTech, Moderna, and Johnson & Johnson, while other countries, like India, have been relying on Cansino and other Chinese vaccines. The Russian vaccine, Sputnik lacks approval in the U.S. (1) Their availability depends on which ones the countries have purchased or manufactured and which have been approved in different countries

According to Pharmaceutical Technology at the time of this writing, there have been 6,411,663,715 vaccines administered across the world with 2,719,826,087 fully vaccinated people, meaning that 46.3% of the world population is fully vaccinated. 217 countries have a vaccination program, 35.8% of the global population are fully vaccinated with the number growing. 6.44 billion doses have been administered globally, and 22.25 million are now administered each day. (2) In the U.S., over 401,819,240 COVID-19 vaccine doses have been administered, 65.3% of the population have been fully vaccinated according to the latest data from CDC. (1, 3) While these numbers are encouraging from a public health perspective, it also means that around 65% of the world’s population have not yet been fully vaccinated and still require the vaccines. Developed countries have, generally, fared better and have had better access to vaccines and only 2.4% of people in low-income countries have received at least one dose. (2, 4)

However, do bio pharmaceutical companies really make money from these vaccines? The answer is YES. For example, following EUA approval, the United States federal government agreed to pay Pfizer/BioNTech $1.95 billion upon the receipt of the first 100 million doses and an additional 50 million doses. The U.S. government also has the option to acquire up to an additional 400 million doses. Meanwhile, Pfizer/BioNTech also announced an agreement in last November with the European Commission for 200 million doses of the vaccine to be distributed to the European Union's 27 member countries, with the option to request an additional 100 million doses. (5)

Moderna's mRNA-1273 vaccine is the second one approved for emergency use by the FDA. The company has reached an agreement with the U.S. for 300 million doses, with the option to purchase an additional 200 million doses. The price is $30 for the required two shots in the U.S. and $36 in the E.U., respectively. (6)

In addition, the company also reached agreements with the European Union (310 million doses with the option to purchase an additional 150 million doses in 2022), Canada (44 million doses), the United Kingdom (17 million doses), Switzerland (13.5 million doses), Japan (50 million doses), the Republic of Korea (40 million doses), Colombia (10 million doses), Israel (6 million doses) and Taiwan, China (5 million doses). (7)

Based on Moderna’s report, the company expected $18.4 billion in anticipated product sales related to advanced purchased agreements for its vaccine. The company is aiming to build supply up to 1 billion doses for 2021, and 1.4 billion doses for 2022. Moderna has established 8 commercial subsidiaries in 2020 in North America and Europe and plans to expand in 2021 to Japan, South Korea, and Australia. (8)

Johnson&Johnson's vaccine is the third  one approved for EUA by the FDA  in Feb. 2021. (9) It was reported that the Janssen vaccine was unlike the other two available vaccines, which requires a single dose, and is more effective. The company is on track to produce 1 billion doses for global distribution by the end of 2021, which would generate up to $10 billion. In August, Johnson&Johnson reached a more than $1 billion agreement with the United States for 100 million experimental doses of its vaccine, with the option to purchase an additional 200 million doses, for $10 per shot. In addition, Johnson&Johnson reached an agreement to supply up to 400 million doses of potential COVID-19 vaccine to EU and also pledged to allocate 500 million vaccine doses to lower-income countries. (10,11)

While the three companies that received approval have been thriving in the U.S., other pharmaceuticals have received significant opportunities in other countries, with Pfizer, Moderna, and Johnson&Johnson also receiving export opportunities to Asia and beyond.  For instance, Sputnik earned around $300 million since the start of 2021 until August, more than Russia received in the previous years combined for their vaccines export. (12) Companies like Dr. Reddy Labs or Aurobindo, working in India have been seeking contracts and authorizations that would allow them to earn money from the vaccines and predicting rises in their stocks. (13) Making vaccines and distributing vaccines, even at lower prices or during a global crisis, has improved the stocks of many companies and has also created long-term opportunities for profit, as the need for vaccines has not subsided, especially in countries beyond the United States.

The major vaccine makers have seen increases in their stocks thanks to their production of vaccines, and more companies are entering the market,

 not only companies that develop these vaccines can benefit, but also those that commercialize them through a private market.  Therefore, the need for COVID-19 vaccines, estimated as a $10 billion a year market now, is unlikely to go away. In addition, companies will continue to own the patents, which they can also commercialize. (1)

It is worth mentioning，not everything has been smooth sailing, despite the sky rocketing profits, opportunities and commercial competitions. August of 2021, for instance, saw a 19% tumble in the stocks of Moderna and BioNtech/Pfizer due to the reports that the European Union would be looking into the side effects from the vaccines. (14) Another reason is because recent developments that pharma giant Merck provided promising interim updates on its oral Covid-19 drug molnupiravir indicating that it cut the risk of hospitalization or death by 50% for patients with mild-to-moderate Covid-19. Merck  plans to submit an application for Emergency Use Authorization (EUA) to the U.S. FDA as soon as possible based on these findings and plans to submit marketing applications to other regulatory organizations worldwide. (15)

Furthermore, Merck aims to produce 10 million courses of treatment by the end of 2021, with more supply expected in 2022. Upon emergency authorization or approval, the company will supply the U.S. government with 1.7 million courses of oral COVID-19 antiviral drug, molnupiravir, and is in talks with other governments as well, according to the company last week. (15)

Take together, Pfizer expects to make a profit of about $15 billion in 2021, with the shares of BioNTech going up by 156% percent. Moderna expects to end 2021 with around $20 billion in sales, with their shares going up over 372%. Johnson&Johnson expects to end the year with around $10 billion in vaccine sales. (16) These three companies have benefited the most in the United States because they gained the required approval and are currently being distributed in the country.

In short, development of effective vaccines is expected to bring a revolutionary change in the infectious disease landscape and would allow pharmaceutical companies  to earn huge profits from the vaccines as well.

References

1 Pharmaceutical Tracker. (2021). https://www.pharmaceutical-technology.com/covid-19-vaccination-tracker

2  https://ourworldindata.org/explorers/coronavirus-data-explorer?

3  https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-total-admin-rate-total

4  https://ourworldindata.org/covid-vaccinations

5 https://www.foxbusiness.com/healthcare/eu-seals-deal-with-pfizer-biontech-for-300m-doses-of-covid-vaccine

6 https://www.businesswire.com/news/home/20201211005585/en/U.S.-Government-Exercises-1st-Option-for-Additional-100-Million-Doses-of-Moderna’s-COVID-19-Vaccine-Candidate

7 https://investors.modernatx.com/news-releases/news-release-details/moderna-announces-european-commissions-approval-advance-purchase

8 https://investors.modernatx.com/news-releases/news-release-details/moderna-reports-fourth-quarter-and-fiscal-year-2020-financial

9  https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/janssen-covid-19-vaccine

10 https://www.foxbusiness.com/lifestyle/johnson-and-johnson-government-coronavirus-vaccine

11 https://www.foxbusiness.com/markets/coronavirus-johnson-johnson-european-union

12  Mozee, C. (2021). https://markets.businessinsider.com/news/stocks/moderna-biontech-stock-price-pfizer-eu-covid-vaccine-side-effects-2021-8

13 The Moscow Times. (2021).https://www.themoscowtimes.com/2021/08/04/russia-has-earned-300m-on-vaccine-exports-so-far-lags-china-a74692

14  Mozee, C. (2021) https://markets.businessinsider.com/news/stocks/moderna-biontech-stock-price-pfizer-eu-covid-vaccine-side-effects-2021-8

15 https://www.foxbusiness.com/healthcare/merck-covid-19-antiviral-pill-eua-request

16. Deccan Herald. (2021). https://www.deccanherald.com/business/business-news/will-covid-19-vaccines-make-money-for-pharmaceutical-companies-923708.html

About the Author

Lin Zhang, M.D., senior director of a health care industry company in the United States. With the experience in clinical medicine, biotechnology, health industry and other fields, he is responsible for the research and development of plant medicine, functional food and health products. He was a clinician and worked for the National Cancer Institute, FDA and the National Cancer Center of Japan for many years.