Moderna and Pfizer just found an additional pot of gold. The US Food and Drug Administration on Thursday authorized a third dose of their coronavirus vaccines for immunocompromised people. That’s about 3 per cent of Americans, but broader use is probably coming soon. Both companies will benefit, but Moderna’s roughly $160 billion market capitalization depends on it more.
The science behind additional shots is somewhat murky as immunity isn’t an on-off switch. Vaccines lower the risk of infection, transmission and serious illness. The side effects from Pfizer and Moderna’s jabs appear to be minimal. As efficacy tends to wane over time — though how much isn’t yet clear for Covid-19 immunisations — there’s a case for an extra shot for the most vulnerable, even if, as is the case for now, it’s not yet tailored to new virus variants.
‘More than boosters in the future’
If the goal is to end the pandemic, though, booster shots aren’t the best use of vaccines. Pfizer cited a study that showed the efficacy of two doses of its vaccine declined over time to 84 per cent from 96 per cent. A few percentage points are nice, but the gains from giving jabs to the unvaccinated are far greater, which is why the World Health Organization has asked governments to hold off on boosters until more people receive initial doses. Yet for political reasons, governments in rich countries probably will encourage boosters anyway.
Pfizer and Moderna together expect roughly $50 billion of vaccine sales this year. Assume generously that half of the people who receive two doses this year get an additional shot next year. If the price is the same, that’s roughly an extra 25 per cent of this year’s revenue, or $12.5 billion, to split between them.
Pfizer’s $264 billion market value accounts for a lot more than just its vaccines. Though it has big plans, Moderna remains largely focused on Covid jabs for now. It’s valued at about seven times estimated revenue over the next 12 months, according to data from Refinitiv. That’s almost twice the multiple accorded to Pfizer and other peers. Even on that generous valuation metric, Moderna’s worth depends on finding over $20 billion of sales annually. Moderna has created its own luck so far, but it will need to sell more than just coronavirus boosters to keep levitating.