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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) on the development and commercialization of its COVID-19 vaccine. And the rest, as they say, is history.
The BNT162b2 COVID-19 vaccine from companies has become the first to obtain Emergency Use Clearances (EUA) in the United States, United Kingdom and Canada. They have made deals to deliver hundreds of millions of doses until 2021.
Almost everything has gone well so far, but it may not always be. Billions of dollars could depend on Pfizer’s next major COVID vaccine move.
Image source: Getty Images.
Cold and hard facts
Pfizer has a problem. BNT162b2 requires ultra-cold storage. How ultra cold is the cold? The vaccine should be stored at minus 94 degrees Fahrenheit for long periods of time. It’s much colder than winter in Antarctica and way below what conventional freezers can handle.
Of course, Pfizer and BioNTech have developed a special charger that uses dry ice to keep the temperature ultra cold. However, some states choose to use Modernof (NASDAQ: ARNM) COVID-19 mRNA-1273 vaccine in rural areas. Although mRNA-1273 uses messenger RNA technology like BNT162b2 does, Moderna has created a formulation that can be stored in standard freezers.
Pfizer’s problem is not too big at this point, however. Rich countries continue to buy BNT162b2, including the recent US government purchase of an additional 100 million doses. After all, there are only two coronavirus vaccines on the market. And Pfizer’s price is more attractive than Moderna’s.
But the dynamics could change dramatically if other COVID-19 vaccines were given EUA. The logistical challenges associated with BNT162b2 could cause rich countries to turn to rivals of Pfizer. Poorer countries could exclude the coronavirus vaccines from Pfizer and BioNTech altogether.
A freeze-dried fortune
Pfizer could forgo a fortune if the ultra-cold storage requirements for BNT162b2 prove to be a significant competitive disadvantage. A transfer of less than 100 million doses sold to another competitor would represent more than $ 2 billion in lower sales for Pfizer and BioNTech.
The good news is that Pfizer has no plans to let storage requirements for its COVID-19 vaccine become a hindrance. The large drug manufacturer and its German partner are working hard to find a solution to the problem of ultra cold.
In November, Pfizer Chief Scientific Officer Mikael Dolsten said in an interview with Business Insider that a freeze-dried (freeze-dried) version of BNT162b2 was in development. This second version of the vaccine would be in powder form. And that wouldn’t require freezing at all – just standard refrigeration.
Dolsten said the freeze-dried powder version of BNT162b2 could be available sometime in 2021. If he’s right, it should be soon enough to prevent billions of dollars in sales from slipping out of Pfizer’s hands.
The big joker
The exact amount Pfizer will earn in the long run with BNT162b2 depends on a wild card that is totally outside of the company’s control. No one is sure at this point for how long any of the COVID-19 vaccines will provide protection against infection with the coronavirus.
If the term of protection lasts for several years, Pfizer will benefit from a huge influx of cash next year, followed by a steep decline in 2022. However, if COVID-19 vaccinations are needed annually or more frequently, BNT162b2 – especially a freeze-dry version – will likely generate recurring revenue of several billion dollars for Pfizer for a long time.
In this scenario, this large pharmaceutical stock will surely grow much more over the next decade.
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