“The typical trajectory that we might expect from the roll-out of vaccines to counter a pandemic – a spike in revenues which then tail off as inoculation rates rise and cases dwindle - may not prove to be the case with Covid-19 – or at least not yet,” says Olaf Tölke, head of corporate ratings at Scope Ratings.

Forecasts that BioNTech-Pfizer Inc. and Moderna Inc. might double sales of their mRNA vaccines to more than $93 billion in 2022, taking the overall Covid-19 vaccine market to nearly $125 billion (excluding Chinese vaccines) compared with nearer $50 billion in 2021, could “prove realistic even if the scale of the increase still appears very large”, says Tölke.¹

“First, vaccination rates vary hugely between countries and regions, ensuring that there remain significant unvaccinated populations where Covid-19 can spread more easily and mutate,” says Tölke.

“Secondly, the political pressure in the developed world to keep economies open by ensuring hospital systems are not inundated with new Covid-19 cases is putting a premium on ensuring vaccination is stepped up,” he adds. “The realisation may also dawn that more needs to be done to vaccinate people in the developing world to slow rates of infection and coronavirus mutation,” Tölke says.

In addition, possibly only partial protection provided by current vaccines against the highly mutated Omicron variant - as Moderna CEO Stéphane Borcel has warned - would be a surprise given vaccine developers’ confidence so far about the efficacy of their product in the face of coronavirus variants². Health authorities in Europe and North America are recommending booster shots as it is.

Tölke says that there are two important caveats to the upbeat vaccine-revenue outlook.

“We would still exercise some caution in terms of vaccine sales in 2022, first because we believe non-vaccine treatments will come to market, such as Merck & Cie’s investigational antiviral pill Molnupiravir which has recently been filed for emergency-use authorisation with the FDA and has already been approved in the UK,” says Tölke. Pfizer is also developing a possibly more effective oral pill regimen which is under FDA review. The drugs would compete with existing vaccines for Covid-19 business next year.

Secondly, it is not yet clear how dangerous the Omicron variant is compared with existing ones. If the rise in Covid-19 cases in the Northern Hemisphere proves to be more closely related to both vaccination rates per country and the typical jump in viral infections in the winter as people congregate more indoors, the urgency behind developing new Covid-19 vaccines might ease.

“Even so, the credit outlook for the pharmaceutical sector remains benign as pandemic-related economic disruption has faded while vaccine, drug and diagnostic-related sales surge,” says Tölke.

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¹Airfinity Ltd., vaccine sales forecasts, 15 Oct. 2021
²Interview, Financial Times, 30 Nov. 2021