COVID-19 Vaccines: Can Pharmaceutical Companies Make Profits?

Jonathan Paglialunga, Staff Writer

The COVID-19 pandemic has birthed the need for pharmaceutical companies to make a leap into creating an effective vaccine.  As a result, companies like Pfizer/BioNTech and Moderna, which are typically not household names, are now being placed in the spotlight. These organizations acted as innovators in the search for the vaccine, which has subsequently enabled other companies to join the race for ending the pandemic.  The quest for innovation has given rise to the question of how these vaccines are being funded and whether or not profits can be made as many competitors are entering the market.

Due to the need for the vaccine, various governments, non-profits, and private companies have sourced billions of dollars for research and testing.  According to Airfinity, a scientific analytics company, governments have provided £6.5 billion while non-profits have contributed £1.5 billion. In perspective, Moderna has raised £1.9 billion, primarily sourced by government bodies whereas Pfizer/BioNTech has raised most of its £2.2 billion through private organizations. In addition, AstraZeneca has amassed the largest amount of funding sitting at £8.19 billion, which encompasses all three types of funding.

It is interesting to note the different philosophies of each vaccine creator in determining the price and methods by which they sell their products. Companies like Johnson & Johnson and AstraZeneca do not want to possess the image that they aim to profit from a global pandemic. 

Subsequently, they have both stated that they are aiming to  sell their vaccines at a price that simply covers their costs. AstraZeneca is currently the cheapest vaccine maker, selling at a price of $4 USD/dose. In contrast, Moderna has been researching RNA technology for several years, influencing them to price their vaccine at $37 USD/dose. Its higher price attempts to make profits for company shareholders and to cover the additional costs of transporting the vaccine at very low temperatures.

Furthermore, Pfizer/BioNTech positions their price between $18-19 USD/dose, which displays the price variance of these vaccines.  The prices that these companies offer are volatile due to the money available by various countries and whether further competition will drive prices down in the long run.

The success of these vaccine makers will also be determined by how well they fulfill their demand for pre-orders through production and distribution. It is no surprise that AstraZeneca has the most pre-orders sitting at 3.29 billion.  Interestingly, pharmaceutical companies like Novavax (1.38 billion), Johnson & Johnson (1.27 billion), Pfizer/BioNTech (1.28 billion), all have more pre-orders than Moderna (780 million).

Barclay’s Emily Field states that the window for companies to make profits will be “very temporary.” In addition, she argues, “in two years’ time, there could be 20 vaccines on the market. It’s going to be difficult to charge a premium price.” Lastly, Field believes that a company’s success in distributing a vaccine can help them become frontrunners on any future product development.

Ultimately, the success of these vaccines is based on the effectiveness of the treatment. Surprisingly, media attention on Pfizer/BioNTech and Moderna has skyrocketed since their respective products display the possible success of RNA technology. Once again, according to Emily Field, the innovation of RNA technology “could change the landscape for vaccines.”

In conclusion, the dominance of the COVID-19 vaccine market and whether a company earns profits will be based on how the landscape unravels.  Will these uncertain market factors allow for these pharmaceutical companies to grasp sizable profits and who will establish themselves as the frontrunner?

Photo by Markus Spiske, Unsplash

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s