The rise and fall of the pandemic overachievers

The three main winners of the pandemic - Pfizer, BioNTech, and Moderna - have seen large drops in market value during 2023. Ben Hargreaves examines why the companies have lost shareholders’ confidence, and how they are preparing for a future without COVID-19 revenue.

Though the COVID-19 pandemic will always be thought of as a crisis, for the pharmaceutical industry it was also a major success. On a basic level, the rapid development of multiple, effective vaccines represented a landmark achievement. For the wider industry, the significant cooperation between companies and the leveraging of every part of the supply chain meant that the financial windfall was also felt throughout.

As in every business, some companies emerged further ahead financially than others. According to Reuters, more than $100 billion in revenue was brought in by the most widely used vaccines and treatments during 2022. At the forefront of this group were the developers of the two main mRNA vaccines, Pfizer/BioNTech and Moderna. Pfizer alone was responsible for more than half of this figure, earning $38.8 billion through its vaccines and $18.9 billion through its antiviral treatment. By comparison, Moderna had revenues of $18.4 billion and BioNTech managed $4.2 billion.

With such massive revenue for a limited period of time, the pressure for the companies involved shifted from developing a vaccine to developing a blueprint on how to effectively use the revenue. Despite the relative fall-off in revenues, this has not stopped the companies also embarking on legal action over certain vaccine patents – with the outcome having further potential commercial implications.

The boom

The two main COVID-19 vaccines, Pfizer/BioNTech’s Comirnaty (tozinameran) and Moderna’s Spikevax (elasomeran), have ensured that the last three years have been marked by high revenue. In the first full year of earnings from vaccines in 2021, Pfizer doubled its revenue in comparison to the previous year, driven by earnings of $36 billion on Comirnaty. Pfizer’s partner, BioNTech was able to post €19 billion in revenue in 2021, representing a significant difference from its revenues in 2020 of just €482 million. Moderna’s revenue landed at around the same mark as BioNTech, with full year 2021 revenues of $18.5 billion, against just $803 million the prior year.

For the two smaller companies, this represented a major change in revenue earnings – an approximate increase of 3,844% for BioNTech and 2,203% for Moderna. This effectively took BioNTech from a market capitalisation of around $3 billion towards the end of 2019 to a peak of $95 billion during the height of the pandemic. A similar story can be seen at Moderna, which was valued at $4 billion at the mid-point of 2019, before rocketing to $181 billion mid-way through 2021. This effectively propelled both into the realm of large-cap pharma companies. Pfizer also received a boost, though not as precipitous as the two smaller companies, increasing its market cap from $200 billion towards the end of 2019 to $330 billion at the end of 2021.

After the rise

The trouble with such a vertiginous ascent, especially when tied to an event that would eventually stabilise, is the subsequent fall. Each of the three companies have seen their share prices reduce substantially year-to-date, with Pfizer’s down 40%, BioNTech 38%, and Moderna 55% at the time of writing. From their respective highs in 2021, the collapse in share price is even more substantial. This leaves each company with the tricky task of convincing shareholders that not only do they have a plan to maximise the potential sales from their COVID-19 products, but also of their long-term prospects beyond the pandemic.

For Pfizer, this has involved using its cash reserves to make large-scale acquisitions, such as through the $43 billion deal for Seagen and an $11.6 billion buyout of Biohaven, among others. The move on Pfizer’s part is standard fare for the mega-cap pharma companies – purchasing an expanded pipeline in the expectation of generating future revenues. Slightly different in the case of the Seagen deal, should it complete, is that Pfizer could become a leader in antibody-drug conjugates (ADCs), which may then provide it with the base to become a bigger player in oncology. However, these additions to the pipeline are not certain winners – they will not add to revenue in the short-term and could potentially fail in the long-term. As such, Pfizer’s share price has struggled to the point that it is now lower than it had been prior to the pandemic, suggesting a lack of investor confidence in this approach.

Differing approaches

For the two smaller companies, BioNTech and Moderna have taken a different approach to Pfizer. Moderna has focused on developing its own pipeline and engaging in share buybacks, with the latter aimed at returning some of its COVID-19 gains to shareholders. Looking to further extend the earnings from its pandemic success, the company has also developed a combination COVID-19 and seasonal flu jab, setting it up for potential approval in 2025. In a recent update, Moderna also stated that it expects to launch up to 15 new products and advance 50 product candidates into clinical trials within the next five years.

BioNTech has sought to find something of a middle ground, by engaging in numerous smaller scale licensing and acquisition deals, and by building out its own pipeline. This saw the German company gain access to a pair of ADCs, in a similar approach to Pfizer, but through a licensing deal rather than a direct buyout. BioNTech also completed a $683 million deal for UK AI company, InstaDeep. In second quarter financials, the aim behind the buyout was to leverage AI and machine learning with its own R&D capabilities to develop novel therapeutic and vaccine product candidates, potentially at a greater speed. The company has also used the financial windfall from the pandemic to accelerate its existing pipeline, with 36 product candidates in mid- to late-stage trials.

A fly in the ointment

One area that may prove complicated for each of the companies going forward is the lawsuit that involves all three companies. In August 2022, Moderna launched a patent infringement lawsuit against Pfizer and BioNTech. The case claims that Pfizer and BioNTech’s product uses a chemical modification that was discovered by Moderna scientists, as well as being in infringement of a certain lipid nanoparticle formulation.

In response, Pfizer and BioNTech countersued, seeking to dismiss the initial claims and suggesting that its patents are invalid and not infringed. The outcome of both trials is important for commercial sales of COVID-19 vaccines, where Moderna could potentially claim a royalty, but also has significance more broadly. If Moderna can stake its claim over certain formulations of mRNA treatments, then it could set itself apart as an outright leader in the technology.

However, there are other lawsuits in the mix aimed at all those involved, such as CureVac’s case against BioNTech. The commercial success, and bright future, of mRNA vaccines means there is a big incentive to earn patent rights in certain areas. With so many differing claims, the field of mRNA therapeutics is in danger of being held up, but for the three companies mentioned, the outcomes could decide how much success they see post-pandemic.