Pfizer (NYSE: PFE) made one of the smartest decisions in the company’s long history earlier this year. He chose to partner with German biotechnology BioNTech (NASDAQ: BNTX) in the development and commercialization of its COVID-19 vaccine. And the rest, as they say, is history.
The companies’ BNT162b2 COVID-19 vaccine was the first to obtain emergency use authorizations (USA) in the United States, United Kingdom and Canada. They closed deals to supply hundreds of millions of doses by 2021.
Almost everything has worked so far, but it may not always be the case. Billions of dollars may depend on Pfizer’s next big move with the COVID vaccine.
Image source: Getty Images.
Cold and hard suits
Pfizer has a problem. BNT162b2 requires ultracold storage. How cold is ultracold? The vaccine should be stored at minus 94 degrees Fahrenheit for long periods of time. It is much colder than winter in Antarctica and well below what conventional freezers can handle.
Of course, Pfizer and BioNTech have developed a special shipper that uses dry ice to maintain the ultracold temperature. However, some states are choosing to use Modernin (NASDAQ: MRNA) COVID-19 mRNA-1273 vaccine in rural areas. Although mRNA-1273 uses messenger RNA technology like BNT162b2, Moderna has created a formulation that can be stored in conventional freezers.
Pfizer’s problem is not very significant at this point. Rich countries continue to buy BNT162b2, including the recent purchase by the US government of over 100 million doses. After all, there are only two coronavirus vaccines on the market. And the price of Pfizer is more attractive than that of Moderna.
But the dynamics can change dramatically if other COVID-19 vaccines receive the USA. The logistical challenges associated with BNT162b2 can cause wealthy nations to switch to Pfizer rivals. The poorest countries can totally discard the coronavirus vaccine from Pfizer and BioNTech.
A lyophilized fortune
Pfizer could lose a fortune if the ultracold storage requirements for BNT162b2 prove to be a significant competitive disadvantage. A change of less than 100 million doses sold to another rival would total more than $ 2 billion in lower sales for Pfizer and BioNTech.
The good news is that Pfizer does not plan to let the storage requirements for its COVID-19 vaccine become an obstacle. The big pharmaceutical company and its German partner are working hard on a solution to the problem of ultracold storage.
In November, Pfizer’s scientific director, Mikael Dolsten, declared in an interview with Business Insider that a lyophilized (lyophilized) version of BNT162b2 is being developed. This second version of the vaccine would be powdered. And it wouldn’t need freezing – just standard refrigeration.
Dolsten said the lyophilized powder version of BNT162b2 could be available sometime in 2021. If he is right, it should happen soon to prevent billions of dollars in sales from escaping Pfizer.
The big wildcard
Exactly how much money Pfizer will earn from BNT162b2 in the long run depends on a wildcard that is completely out of the company’s control. No one knows for sure at this point how long any of the COVID-19 vaccines will provide protection against coronavirus infection.
If the duration of protection lasts several years, Pfizer will have a large cash flow next year, followed by a sharp decline in 2022. However, if COVID-19 vaccinations are required annually or more often, BNT162b2 – particularly a freeze – dry version – will likely generate recurring revenue in the billions of dollars for Pfizer for a long time.
In this scenario, this large pharmaceutical stock will almost certainly grow much more in the next decade.