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Pfizer's COVID Vaccine Price Increase Will Boost Revenue For Years; Competitors May Follow

Pfizer's COVID Vaccine Price Increase Will Boost Revenue For Years; Competitors May Follow
Analysts say Pfizer's plan to more than quadruple COVID-19 vaccine prices in the United States next year exceeds Wall Street expectations and will boost revenue for years to come, despite lower-than-expected demand for the new booster shot so far.
The drugmaker, which developed and sells the vaccine with Germany's BioNTech, stated that it expects the vaccine to cost between $110 and $130 per dose once it enters the commercial market in the United States next year.
According to analysts, the move could lead to price increases by competitors. In afternoon trading, Pfizer shares were up 4.3 per cent to $44.77. Expected price increases boosted rivals Moderna and Novavax's shares by 9 per cent and 11 per cent, respectively.
The United States is one of the most important markets for Pfizer/BioNTech COVID-19 shots. During the pandemic, the companies' prices varied, with wealthy countries paying the most and poorest countries paying the least.
Pfizer announced on Thursday that it has contracts with other developed countries that run through 2023 at previously agreed-upon prices. It stated that as the pandemic distribution model fades, the contracts would revert to normal pricing.
According to Wells Fargo analyst Mohit Bansal, the new vaccine pricing range could add $2.5 billion to $3 billion to Pfizer's annual revenue.
"This is much higher than our assumption of $50 per shot, and even assuming $80 per shot net price in high-income countries, we see $2 per share upside to our estimates" from the new prices, Bansal wrote in a research note.
The People's Vaccine Alliance, a global vaccine connect organization that has pushed Pfizer to allow cheaper copies of the vaccine to be made, called the proposed price increase "daylight robbery."
According to Pfizer, the price range announced represented a more than 10,000% markup over what experts estimated the vaccine makers' costs to produce the shots.
Pfizer's COVID vaccine price targets are significantly higher than the cost of annual influenza shots. The government pays around $20 to $30 for standard flu shots and around $70 for high-dose shots under the Medicare program in the United States.
The public announcement of the new price range may serve as a signal for Moderna and Novavax to follow suit.
"We expect Moderna to adapt to this signal," SVB Securities analyst David Risinger said in a research note, adding that he sees Pfizer/BioNTech, Moderna and Novavax "pricing in a similar range for the foreseeable future."
Moderna had previously estimated commercial price expectations to be in the $64-$100 range per shot. It declined to elaborate.
Novavax's COVID vaccine, which was only recently approved, has yet to gain a significant foothold in the US market.
Prior to Pfizer's announcement, Novavax Chief Commercial Officer John Trizzino told Reuters on Wednesday that his company would consider lower prices to gain market share.
"We need to make sure that... we’re stocked at pharmacies, we’re stocked at healthcare providers," Trizzino said. "To the extent that we've got to do something with price in order to ensure that that happens, then maybe that's a lever that we’ll pull."
Due to low demand for COVID vaccines, Wall Street expected price increases to allow manufacturers to meet revenue projections for 2023 and beyond.
Despite broad eligibility, approximately 19.4 million people in the United States received the updated boosters during the first seven weeks of their rollout. Over 27 million people received their third vaccination in the first seven weeks of the 2021 revaccination campaign, despite the fact that only the elderly and immune-compromised were eligible at the time.

Christopher J. Mitchell

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