What Pfizer’s vaccine means for Big Pharma

Albert Bourla, Pfizer chief executive, said it was “a great day for science and humanity” when he announced interim data suggesting the jab is more than 90 per cent effective in preventing people from contracting COVID-19. But this excitement must be tempered with a dose of realism. Drugs that reach phase three trials like this one have about an 80 per cent chance of success, so there is still scope for failure.

This trial is just over halfway through and although Pfizer said there is no evidence of any risk, safety data has yet to be released. If the vaccine is effective but causes terrible side effects, it’s dead in the water.

Everyone is getting overly excited very early and we still don’t have any trial data yet and no safety data.

Julie Simmonds, a healthcare analyst at Panmure Gordon

It’s also worth bearing in mind that Pfizer’s vaccine uses a completely new technology that has never before been trialled in this way.

“This is not an average drug, it is a vaccine and I always remind investors that, at the moment, we only have vaccines against 20 diseases and that represents the entire weight of human endeavour,” says Miles Dixon, an analyst at Peel Hunt.

Julie Simmonds, a healthcare analyst at Panmure Gordon, says: “Everyone is getting overly excited very early and we still don’t have any trial data yet and no safety data.

“There is a rather rapid switch that appears to be going on in the stockmarket, that, oh it’s all going back to normal. It’s not actually, there is a big transitional period ahead, there will be a limited number of doses, and that is provided the vaccine passes the trial, so we need a little bit of caution at how transformational this really is.”

You would be forgiven for thinking that the first pharmaceutical player to come out with a vaccine will reap massive profits. But a successful COVID-19 vaccine is unlikely to result in an immediate financial boost.

Pfizer is developing the vaccine alongside German biotech BionTech and has self-funded its vaccine programme, spending around $US2 billion ($2.7 billion) on research. A spokesman said the firm is looking to make “some profit” but industry experts believe it is unlikely to “price gouge” – jargon for hiking the cost of a drug because of high demand and low supply.

“I think it will be more of cover costs, make a small profit and just be the global saviours to the planet,” says one analyst. There is talk in the industry of prices per dose ranging anywhere from $US3 to $US40. Other pharmaceutical companies whose vaccine candidates are equally advanced as Pfizer’s include AstraZeneca, Moderna and Janssen. In contrast to Pfizer, these companies have received substantial grants from governments or other organisations to fund research. AstraZeneca, which is an Anglo-Swedish company, has vowed to sell the vaccine it is developing alongside Oxford University at cost until the pandemic phase is over with the implication that it will then switch to commercial pricing.

GlaxoSmithKline, which is also listed in London, does not expect to make a profit during the pandemic phase either. It is working with other companies by offering so-called adjuvant technology for their vaccine research programmes. An adjuvant is a chemical compound that is added to a vaccine that can boost the immune system and turbocharge the vaccine. Analysts are wary of putting a figure on how big the market for a COVID-19 vaccine could be worth, given the uncertainty around how long immunity will last, pricing, manufacturing, distribution and even safety. Ms Simmonds says that, ultimately big pharma can make a lot of money, but the first to launch will not necessarily lead the market.

“Some vaccines will be more effective than others, some that, for instance, require a cold chain might not be suitable for some markets, some might be single dose, some double dose, so there won’t be a one-size-fits all,” she says.

There’s also the issue of manufacturing. Pfizer will produce roughly 1.2 million doses in 2021, and with two doses per person that means at most 600 million people can be treated worldwide, and there are nearly 8 billion people on the planet.

In other words, this is an enormous market with space for several players. Governments, meanwhile, will be willing to pay what it takes to bring life, and the economy, back to normal.

As for who is next in the race to deliver a COVID-19 jab, it’s impossible to predict. AstraZenecea, Janssen and Moderna are likely to report final stage results before Christmas.

Telegraph, London