For decades, vaccines were the mainstay neglected by the big pharmaceutical companies. Big drugmakers have preferred to focus on drugs like Lipitor—a statin used to lower blood cholesterol—which was first approved in 1997 and has contributed $143 billion to Pfizer’s revenue since 1999. Or Norvasc— a calcium channel blocker that dilates blood vessels and improves blood flow—which has generated more than $50 billion in revenue for Pfizer over the past 20 years.
Drugs like Lipitor and Norvasc are so profitable because they are prescribed to patients with a common and chronic condition, and since the drug is protected by patent, this exclusivity translates into high prices and profit margins. For example, between 2004 and 2011, when its patent expired, Lipitor generated more than $10 billion a year.
Other profitable drugs may treat less common conditions, but are sold at very high prices. For example, in 2018 a 90-pill bottle of Lyrica — a drug that treats epilepsy, as well as neuropathic pain and damage due to diabetes, shingles or fibromyalgia — cost more than $650 before rebates and discounts. Since FDA approval in 2005, Lyrica has generated more than $52 billion in revenue.
Could the mRNA-based vaccine for COVID-19 — known, at least for now, as BNT162b2 — be just as profitable? Probably not.
The economics of vaccines are different. Unlike a drug that treats an ongoing chronic condition, a vaccine, particularly an effective one, usually requires only a few doses to provide lifelong protection. For example, the polio vaccine provides lifelong immunity, and adults at increased risk of exposure to the virus may receive another booster dose for life. Even the seasonal flu shot is only given once a year — and that’s for those who choose not to get it at all.
There is a huge demand for vaccines. After all, most of us have received enough of them at some point in our lives. Today, the CDC recommends that children receive more than 30 doses of vaccines by age 12. However, traditional vaccines have abysmal profit margins. In 2005, global vaccine sales totaled $8.9 billion—significantly less than what Lipitor alone earned that year.
However, the past decade has seen an increase in investment in vaccines. Insurers and governments in developed countries started paying higher prices, and the demand for vaccination has also increased in developing countries. In fact, Pfizer’s best-selling drug these days is a vaccine called Prevnar 13, which is recommended for all children under the age of 2 and for all adults age 65 and older to protect against pneumonia. When it was approved in 2010, Pfizer was able to charge $108.75 per dose in the US — much higher than previous vaccines — and prices have risen. In 2019, Prevnar 13 had $5.8 billion in revenue, more than Lipitor, Lyrica or Viagra.
But it’s unclear whether BNT162b2 will be as successful. For starters, Pfizer won’t be able to charge such a high sticker price for its coronavirus vaccine. Pfizer has signed agreements to provide 100 million doses in the US, 200 million in Europe and 40 million in the UK, but those numerous doses will not be sold for $100 or $200 per dose: the US government has agreed to pay just 19 $.50 per dose. And while Pfizer said it would charge other developed countries a similar price for its vaccine, rivals Johnson & Johnson and AstraZeneca have both promised to make their vaccines available in non profit. For example, AstraZeneca charged governments just $3 to $5 per dose throughout the pandemic.
Furthermore, if there is one lesson that both companies and governments have learned during the COVID-19 crisis, it is that long supply chains and over-reliance on a few suppliers puts them at risk. Governments are likely to buy vaccines from multiple companies and may prefer local manufacturers. And there’s no shortage of competition: several other companies – including Johnson & Johnson, AstraZeneca and Moderna – are also in the development stage of the coronavirus vaccine. Vaccines against the coronavirus have also been developed in other countries, such as China’s Sinopharm vaccine and Russia’s Sputnik V coronavirus vaccine.
All this competition means that while Pfizer’s earnings next year should be big — a recent analysis by Morgan Stanley estimates that Pfizer’s 2021 revenue will be similar to what it had with Prevnar 13 in its peak year – it is less clear that this level of sales will be maintained in the coming years. Ironically, the more effective a vaccine is — and from early indicators, Pfizer’s vaccine appears to be quite effective — the less likely it is to generate income in the future. A sufficiently effective vaccine, eventually, could wipe out the pandemic and make it increasingly irrelevant.
BNT162b2—hopefully given a better name—will generate significant revenue and profit for Pfizer. But in all likelihood, it won’t be the new Lipitor. However, it will do something even more important: help save lives and livelihoods.
this article originally appeared on Forbes.