Covid-19 vaccines might be pretty lucrative after all
Yesterday, Pfizer said it agreed to sell the U.S. government 100 million doses of its investigational Covid-19 vaccine for $1.95 billion, which, as those with pens and envelopes could deduce, works out to $19.50 per dose. It also sets a price point for scores of vaccine candidates in development.
Pfizer, unlike Johnson & Johnson and AstraZeneca, has never promised to sell its vaccine without taking a profit. And, according to SVB Leerink analyst Geoffrey Porges, the price it negotiated leaves plenty room for revenue. Porges estimates that the per-dose cost of manufacturing, once Pfizer is running at full capacity, works out to about $1 per dose. That leaves a sizable profit margin for Pfizer to more than recoup its investment, estimated at $1 billion this year alone.
None of this will matter if Pfizer’s vaccine, developed with BioNTech, doesn’t work in the large Phase 3 trial slated to begin this month. But the company’s commitment will have a ripple effect for other developers, especially Moderna, which is using a similar technology. If the two vaccines end up having similar safety and efficacy, Moderna likely just got penned in on pricing.
Pfizer, unlike Johnson & Johnson and AstraZeneca, has never promised to sell its vaccine without taking a profit. And, according to SVB Leerink analyst Geoffrey Porges, the price it negotiated leaves plenty room for revenue. Porges estimates that the per-dose cost of manufacturing, once Pfizer is running at full capacity, works out to about $1 per dose. That leaves a sizable profit margin for Pfizer to more than recoup its investment, estimated at $1 billion this year alone.
None of this will matter if Pfizer’s vaccine, developed with BioNTech, doesn’t work in the large Phase 3 trial slated to begin this month. But the company’s commitment will have a ripple effect for other developers, especially Moderna, which is using a similar technology. If the two vaccines end up having similar safety and efficacy, Moderna likely just got penned in on pricing.
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