In a Post-Covid Shock, Pfizer and Moderna eat the bitter pill of excess. Billions worth of medicines being dumped in the UK and US.

As the Covid health emergency declines across the globe, its prescriptions have no takers. A recent report by London-based life sciences analytics firm Airfinity unveiled alarming figures indicating that by February’s end, the value of expiring Paxlovid Covid drug courses in Europe is expected to reach a staggering $2.2 billion. Pfizer Inc. the pharmaceutical giant and manufacturer of Paxlovid faces mounting challenges as the demand for its COVID-related products declines, leading to a substantial cut in revenue projections for 2024.

Pfizer shares have fallen nearly 49% this year and are now trading below pre-pandemic levels, signaling a stark reversal for the once-thriving biopharma giant. On the other hand, Moderna which recorded an increased market share in vaccine market saw its stock surge to 48% in 2023 despite the overall declining sales.

Moderna Inc. company posted a drastic 2023 decline in its Covid vaccine sales, with revenues plummeting to $6.7 billion, marking a staggering two-thirds drop from its 2022 earnings of over $18 billion. This revelation comes amid declining public concern about the virus, resulting in a dramatic reduction in demand for Moderna’s Covid products.

The latest figures, announced ahead of Moderna’s appearance at the JPMorgan Healthcare Conference, highlight the profound impact of reduced Covid cases on vaccine demand. The company’s shares nosedived by nearly 45% in response to weakening demand for its primary product, the Covid vaccine, which remains its sole commercially available offering. While $6.1 billion of Moderna’s revenues originated from Covid vaccine sales, an additional $600 million was attributed to deferred revenue related to its collaboration with Gavi, a global vaccine distribution organization. The company’s third-quarter projections in November forecasted Covid vaccine sales to reach at least $6 billion, indicating a relatively accurate estimation of the year-end revenue.

With a considerable increase from the 37% market it captured in the preceding year, Moderna, the biotech biggie anticipates an even sharper decrease in vaccine sales for 2024, reiterating its full-year sales guidance of approximately $4 billion, including revenue from its potential respiratory syncytial virus (RSV) vaccine set for potential FDA approval in April.

Pfizer’s financial challenges are visible in  the company’s revised 2024 revenue forecast that falls far short of initial projections. The company anticipates revenue ranging between $58.5 billion and $61.5 billion, a significant reduction from analysts’ expectations of $63.2 billion. The drop is primarily attributed to dwindling demand for its COVID-19 products, particularly the Comirnaty vaccine and Paxlovid pill. This decline in revenue prospects has sent shockwaves through the stock market, with Pfizer’s shares plummeting by 9%, while its vaccine partner, BioNTech, and Moderna also experienced similar downturns. These figures starkly contrast the company’s previous success, highlighting the swift and drastic changes in market dynamics surrounding COVID-19 products.

CEO Albert Bourla has adopted a conservative approach, acknowledging that the company intentionally understates its forecasts to avoid market uncertainties, despite expecting vaccination and treatment rates in 2024 to match current figures. The downward revision reflects Pfizer’s efforts to provide reliable estimates amidst unpredictable market fluctuations. Despite the anticipated contributions from Seagen to Pfizer’s 2024 revenue, the company announced an expanded cost-realignment program aimed at addressing the decline in revenue due to reduced demand for COVID-19 products. The initiative, expected to save $4 billion, will impact R&D investment and selling/administrative costs to counterbalance the revenue shortfall.

Dave Denton, Pfizer’s CFO, conceded the challenging landscape ahead, suggesting that achieving the previously projected non-COVID compound annual growth rate of 6% from 2020 to 2025 might prove ambitious given the current market dynamics. The company’s shares, having plummeted nearly 49% this year, are now trading below pre-pandemic levels, signaling a stark reversal for the once-thriving biopharma giant.

In an attempt to offset a similar decline, Moderna projects a return to sales growth by 2025, primarily through the launch of new products. The company is presently developing 45 products, nine of which are in late-stage trials. Among these, the combination Covid and flu shot stands as a potential approval candidate as early as 2025.

Moderna aims for financial breakeven by 2026, despite the tumultuous downturn in its Covid-related revenue. While shares rose by 2.7% following the announcement, Moderna acknowledges the challenge ahead in navigating the evolving Covid product demand.

The company’s long-term strategy focuses on leveraging its mRNA technology for broader applications beyond Covid, targeting illnesses like the flu, RSV, cancer, and other ailments. Recent successes, including a personalized vaccine developed with Merck & Co. that aids in preventing severe skin cancer recurrence, demonstrate the potential of its mRNA technology in diverse medical fields.

While investors display growing optimism—marked by a 60% rally in shares since their November low—Moderna’s resilience relies on the imminent release of final-stage study data for new Covid-19 vaccine variants, along with vaccines for flu, cytomegalovirus (CMV), and more, anticipated within this year.

As both Pfizer and Moderna confront these challenges in a post-COVID era, the need to reshape their survival strategies becomes imperative. The pharmaceutical poster boys of the pandemic period, face an uphill task of adapting to evolving market dynamics and redefining their sales and subsequent profits.