Pfizer’s Covid cash powers a ‘marketing machine’ to find new supernovas

For drugmaker Pfizer, a fortune amassed during the Covid pandemic is now paving the way for pharma nirvana: weight loss pills worth billions.

The company has spent nearly $100 billion selling Covid-19 vaccines and treatments to US taxpayers and foreign governments. With this volatility, it plans to get richer by sinking cash into developing and marketing potential blockbusters for conditions like migraines, ulcerative colitis, prostate cancer, sickle cell disease and obesity.

It has just announced that it will triple or even quadruple the price of its Covid vaccine when it goes on the commercial market next year. Meanwhile, the company is inundating doctors and pharmacists — and consumers — with ads for its Covid drug paxlovide.

“Pfizer is a tremendous marketing machine. They have an incredible ability to make the most of molecules and take them,” says Timothy Calkins, professor of marketing at Northwestern University’s Kellogg School of Management.

The federal government is helping Pfizer with its marketing, Calling people to get boosters omicron targets the variants, though early data is mixed on whether the shots work better than the previous version. But while sales of the Covid vaccine fell 66% last quarter, the company made nearly $4.4 billion in those three months. Pfizer has a deep cash flow to fund its future. Covid has been very good for business.

The company appears most excited — judging from its messages to investors — about two experimental diabetes pills, “me too” drugs known as GLP-1 agonists. As Pfizer’s competitors have already discovered, they double as weight-loss drugs. In one trial, more than half of obese patients given high-dose Eli Lilly & Co. injectables lost a fifth of their body weight—results that have boosted the drug’s cachet as a diet aid in Hollywood, Silicon Valley and other social niches where cost isn’t an issue and slimming is always the norm.

Wall Street analysts are predicting such widespread demand for these drugs that Pfizer “could find a niche with marketing” if its version works, even though it’s at least two years away from licensing, said Mohit Bansal, a Wells Fargo analyst. By 2035, the Lilly drug could generate $100 billion a year for its formulation, according to a Bank of America analysis.

Pfizer still sees Covid as a “multibillion-dollar franchise” long-term, Chief Financial Officer David Denton said on a Nov. 1 earnings call, as Covid is “going to be a little bit like the flu, the sustained flu, but actually more deadly than the flu.”

The company announced on Oct. 20 that it would charge $110 to $130 per shot when the government contract expires next year, more than double what investors had expected. According to Zaid Rizvi, a researcher at the advocacy group Public Citizen, the US government paid $30.50 per shot in its latest deal with Pfizer.

CEO Albert Borla told investors Pfizer was a good citizen in keeping prices low during the worst of the pandemic. Now payers will pick up the extra cost, while consumers “won’t see the difference” because there’s usually no copay for the vaccine.

Still, until new mutations are dangerous enough to scare enough people, Wall Street analysts expect sales to lag, as public interest wanes, Republican politicians discourage booster shots and concerns persist about rare heart damage in young people getting the shot. Pfizer said in July that it had taken a “$450 million write-off on inventory related to Covid-19 products” that had exceeded the “authorized shelf-life”. And on November 3, Moderna lowered its sales forecast for its Covid vaccine.

“Not many people are going to go out and get their fourth, fifth and sixth booster unless there’s a big new variant,” said Geoff Meacham, an analyst at Bank of America. “If you have two mRNAs and a booster, you’re pretty protected. Do you need it annually?”

This lagging interest in Covid products has led to investors pressing Pfizer to show where it can earn revenue from three bestsellers – breast cancer drug Ibrance, rheumatoid arthritis drug Zelzange and Eliquis, a blood thinner – whose patents expire this decade. done

While conducting its own research, Pfizer has beefed up its development portfolio over the past two years with companies already developing promising drugs. The company expects these purchases, and its own operations, to give it $25 billion in new annual revenue by 2030.

Meanwhile, the company has treated investors to $25 billion in dividends over the past three years and spent $9 billion boosting share prices through stock buybacks.

All this is due to huge profits from its Covid products, which has enabled it to overtake Johnson & Johnson as the biggest industry earner by 2022. Covid vaccines and Paxlovid, and the company expects an additional $15 billion for the rest of this year. Until recently, investors were predicting that number would drop to about $11 billion annually by 2026, but Pfizer’s recent commercial value announcement raised that number, potentially, to $3 billion, according to a Wells Fargo analysis.

Still, “from an investor’s point of view, the focus is not on Covid at the moment. The focus is, what do they do with this money and expertise?” Bansal said, and how to “use it to grow their core business.”

For that key growth, Pfizer has acquired several mid-sized companies with promising or licensed drugs since last year. It spent $11.6 billion on Biohaven, whose migraine drug Nurtec ODT brought in $324 million in the first half of 2022. Pfizer predicts annual revenue from the drug will be up to $6 billion.

Hopes are also high for sickle cell anemia drug Oxbryta, made by Global Blood Therapeutics, which Pfizer bought for $5.4 billion. Priced at $125,000 a year, the drug, which boosts patients’ oxygen levels, generated $100 million in revenue in the first two quarters of the year but could be worth $2.5 billion annually with a strong marketing engine behind it, according to Wall Street analysts.

Pfizer is strengthening its franchise in respiratory vaccines and treatments, Dr. Mikael Dolsten, chief scientific officer, said on the Nov. 1 call. It is the first in a race against GSK and Moderna to license a vaccine that protects older adults as well as pregnant women and their newborns against RSV, a respiratory virus that has overwhelmed children’s hospitals this fall. The company also released an updated version of its bacterial pneumonia vaccine, which brought in $5.3 billion in 2021.

Other mRNA vaccine companies are also rolling in cash but their strategies are narrower. Moderna is testing 32 infectious-disease vaccines and developing a long-shot standalone cancer vaccine. Pfizer’s German partner, BioEntech, which developed much of the core of their Covid vaccine, has a similar focus.

Both Pfizer and Moderna this year began advanced clinical trials for their first non-Covid mRNA vaccines – against influenza. If the flu season is extensive enough, tests can show whether vaccines are better than standard flu shots and whether one works better than another.

With 80,000 employees and $81 billion in 2021 revenue, investors expect a lot from Pfizer. And they are likely to get it.

Nurtec, the migraine drug it acquired with Biohaven, would be a good test case. Pfizer and similar giants each have at least 2,000 sales representatives marketing to primary care physicians in the United States, Calkins said. Such an operation probably costs $400 million a year, he said, far more than a company like Biohaven can afford.

Pfizer will use its marketing expertise, particularly among primary care physicians, “to build the world’s leading migraine franchise,” CEO Borla said on the Nov. 1 call. Wells Fargo analyst Bansal said Pfizer has the resources to flood the media with direct-to-consumer advertising and negotiate with insurers and pharmacy benefit managers to ensure patients can get it and other drugs.

Reaching sickle cell patients is difficult, but Pfizer has “the relationships in the hospital setting, the amount of investment they’ve made in commercialization to increase sales of Oxbryter,” said Evan Seegerman, a research analyst at BMO Capital Markets.

Pfizer also plans to make a blockbuster of itrasimod, an experimental drug against ulcerative colitis acquired by its $6.7 billion purchase of Arena Pharmaceuticals.

Pfizer’s GLP-1 formulation is key to its goals. GLP-1 drugs are similar to an intestinal peptide, or small protein, that stimulates biochemical pathways that help release insulin, reduce appetite, and lower certain immune systems. While the drugs were developed and licensed to fight type 2 diabetes, the FDA has also approved one of them to treat obesity, and companies are testing GLP-1 formulations against fatty liver disease, sleep apnea, kidney disease, congestive heart failure. Even Alzheimer’s and Parkinson’s.

Pfizer executives said they will decide by 2024 which of the two candidate drugs will be put into larger clinical trials. According to Dolsten, the company has found a niche for itself with a pill that can be taken with or without food. Most of the current products are injectable, which turns many people off.

Assuming a drug is licensed, marketing will do the rest.

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