Americans have received more than 120 million doses of the COVID-19 vaccine. Another 2.4 million injections are administered each day. In the coming months, all adults in the United States who want to be vaccinated will do so.
But there is a big unanswered question that affects anyone who receives a COVID-19 vaccine: how long will the vaccines provide protection against a new coronavirus infection? This is not like the old TV game show The $ 64,000 question, Although. How long the COVID-19 vaccines last is a billion dollar question.
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Billions of dollars at stake
Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) were the first to gain US Emergency Use Authorization (USA) for their COVID-19 vaccine, BNT162b2. In February, Pfizer estimated that the vaccine would generate sales of about $ 15 billion this year based on the supply agreements in effect at the time.
However, since then, the two companies have received additional orders for BNT162b2 – 100 million additional doses for the US and 200 million additional doses for the European Union. These businesses are expected to boost sales of BNT162b2 to more than $ 20 billion in 2021.
Modern (NASDAQ: MRNA) won USA for its vaccine COVID-19, mRNA-1273, shortly after Pfizer and BioNTech. Biotechnology expects to generate $ 18.4 billion in sales this year with the vaccine.
Johnson & Johnson (NYSE: JNJ) secured the USA for its single-dose vaccine COVID-19 at the end of February. The health giant is selling the vaccine at cost price during the pandemic for about $ 10 a dose. J&J expects to provide at least 1 billion doses of its vaccine this year. Assuming it reaches that goal, the company will make about $ 10 billion in sales.
These three vaccines alone can earn well over $ 48 billion this year. And we don’t include sales of COVID-19 vaccines from AstraZeneca (NASDAQ: AZN) and Novavax (NASDAQ: NVAX), both of which could win USA USA in the near future.
The best guess now
No one knows for sure how much of this huge revenue these companies will earn in 2021 will be recurring. In theory, COVID-19 vaccines could provide protection against infection for years. In that case, vaccine sales would plummet by 2022.
On the other hand, let’s assume that booster doses are needed every six months or more. This scenario would mean that Pfizer, Moderna and the other companies could count on significant revenues each year.
The problem is in our original question. We do not yet know how long the immunity provided by the COVID-19 vaccines will last. There is a good reason for the mystery: not enough time has passed since the first participants in the clinical studies were fully immunized.
New variants can also be critical. Even though current COVID-19 vaccines provide long-term protection against existing strains of coronavirus, the emergence of new viral variants may require more frequent booster doses.
Probably the best guess now is to follow the forecast by Moderna CEO Stephane Bancel that COVID-19 will be like seasonal flu. If he is right, annual vaccinations will be needed.
Potential winners and losers
A recurring market for COVID-19 vaccines may be quite different from what we are seeing in 2021. Governments around the world are currently trying to get their hands on any vaccine that has expired or is likely to obtain authorization. However, in the future, other factors may be important.
As the supply of vaccines grows enough to meet demand, price will become a bigger problem. This could benefit Johnson & Johnson, as their vaccine requires only a single dose. However, Moderna is evaluating a next generation COVID-19 vaccine that could also be administered in a single dose. Don’t be surprised if Pfizer and Novavax, both whose vaccines are highly effective at two doses, move forward with testing single dose regimens.
Perhaps the most critical differentiator in the future, however, is how quickly companies can develop safe and effective vaccines for new variants of the coronavirus. This could be an advantage for Pfizer / BioNTech and Moderna. Its messenger RNA technologies allow rapid development of vaccines.
AstraZeneca and Johnson & Johnson may be at a disadvantage because of their adenovirus delivery methods. It is possible for individuals to develop immune resistance to the adenoviruses used.
In general, the biggest winners, if frequent booster doses are needed, are likely to be relatively minor biotechnology stocks, rather than large pharmaceutical stocks. BioNTech, Moderna and Novavax would feel the impact of the strong recurring revenue from sales of the COVID-19 vaccine more than AstraZeneca, J&J and Pfizer. However, if it turns out that COVID-19 does not become similar to seasonal flu, those biotech stocks would likely be the biggest losers.
When will we know the answer to the multi-billion dollar question that hangs over all these drug makers? Probably, in the fourth quarter, we will have at least a good idea of the need for annual booster doses or not. This is when the participants in the final stage studies conducted by Pfizer / BioNTech and Moderna will have been fully vaccinated for at least one year.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even our own – helps all of us to think critically about investing and making decisions that help us become smarter, happier and wealthier.