New crown track into the red sea, Pfizer 100 billion revenue is also difficult to sustain

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Despite the negative news about the new crown concept products, the increasing cost of innovation, the rise of companies in emerging market countries and many other adverse factors, but this does not affect Pfizer in any way to become the most profitable pharmaceutical companies in 2022.

On January 31, Pfizer released its 2022 earnings report. According to the earnings report, Pfizer’s full-year net profit attributable to common shareholders for fiscal year 2022 was $31.372 billion, up 42.74% year-on-year, and operating income was $100.330 billion, up 23.43% year-on-year, making it the world’s first pharmaceutical company with annual revenue of more than $100 billion. Among them, the new crown mRNA vaccine Comirnaty and the oral new crown drug Paxlovid will achieve a total sales revenue of US$56.739 billion in 2022.

Talking about the performance expectations for 2023, Pfizer said that it expects the revenue of neo-crown virus vaccine to be about $13.5 billion and Paxlovid to be about $8 billion in 2023. Due to the decline in market demand for P-drugs and the new crown vaccine, Pfizer forecasts a full-year revenue range of between $67 billion and $71 billion, which will be a significant decline of 29% to 33% compared to 2022, and will also be lower than the market’s expectation of $71.75 billion.

A brokerage pharmaceutical industry analyst told reporters that the control of the infection rate of the new crown epidemic will still be dominated by vaccines, and the future development of the overall new crown oral drug will still focus on reducing mortality as the primary goal, while minimizing symptoms. The recent drug development is mainly based on the characteristics of Omicron to do clinical research, while the new crown virus belongs to the RNA virus, the probability of genetic mutation is high, long-term changes, the future oral new crown drugs need to consider the potential mutant strains, for the improvement of the mechanism of action, so there will also be more targets of oral new crown drugs to join the research and development pattern.

“This means that Pfizer will have more and more competitors, and competitors will appear to have lower prices than one another as a way to capture market share. From the current competitive landscape, the first offer of the new crown oral drug, which also lays out the 3CL target, including Centrum Pharmaceuticals, has been quoted at $750/box. And there are more than 10 domestic new crown oral drugs in the clinical development stage, and the possibility of ‘floor price’ will follow. Competition in the new crown drug market has become fierce, and ultimately which new crown innovative drug can get the largest share or rely on solid clinical data and actual treatment effects to speak.” The analyst said.

Price war opens, who can run out of new crown drugs?

Compared with before the epidemic, both multinational drug companies and local innovative drug companies, products directly related to the epidemic continue to enter the commercialization phase, which has become a strong growth point to pull the new corporate performance.

From the current drug market, so far, the domestic approved listing of a total of five new crown oral drugs, in addition to Pfizer Paxlovid, Merck Sharp & Dohme Monoravir capsules (Molnupiravir), the domestic approved new crown oral drugs including real biological Azulfidine, Centrum Pharmaceuticals Xianoxin, Wang Shi biological Mindvine. In addition, there are more than 10 domestic new oral crown drugs in clinical development, involving companies such as Pioneer Pharmaceuticals, Zhongsheng Pharmaceuticals, Gloria Pharmaceuticals, Genting Singyao, Green Leaf Pharmaceuticals, Fohong Hanlin, and Shenzhou Cell.

In response to the current competition pattern of the new oral drug market, a brokerage medicine chief analyst told the 21st Century Business Herald that the State Drug Administration will speed up the approval process of new crown drugs, and it is believed that it is only a matter of time before more new crown drugs are listed and even included in the medical insurance in the future.

For Pfizer Paxlovid, the biggest competitor is undoubtedly Merck Sharp & Dohme Monoravir capsules (Molnupiravir). Merck Sharp & Dohme predicts that Molnupiravir sales will reach $5 billion to $6 billion in 2022, and financial data has not yet been released. However, Merzadone also ushered in heavy news at the end of 2022, with the approval of Molnupiravir capsules in the domestic market. on January 11, Tianjin Pharmaceutical Procurement Center released the “public announcement of the first offer of the new crown treatment drug Molnupiravir capsules”, the first offer of Molnupiravir capsules was 1500 yuan/bottle, 40 capsules/bottle, and the import c.i.f. price (excluding tax) was between 1100 and 1200 yuan, with major countries ( United States, Japan, South Korea, etc.) price of $712 (about 4783 yuan), the selling price is lower than the price of Pfizer’s new crown oral drug Paxlovid (1890 yuan / box, a total of 30 capsules).

Pfizer not only has to face the competition from Mercer, domestic oral drugs are also raging, the price advantage is more obvious. According to the National Health Insurance Bureau, the new crown treatment oral medicine Azulfidine tablets, lung detoxification granules and other 2 drugs through the negotiation of reduced prices officially into the national medical insurance drug catalog. Among them, Azivudine tablets medical insurance price of 11.58 yuan / tablet / 3mg, 3mg specification price reduction of about 35%.

It is understood that Azivudine tablets for the treatment of new crowns are mainly 1mg specification, according to the drug differential price rules, after the price reduction of 3mg specification, the price of 1mg specification will also be reduced to 4.99 yuan/tablet accordingly, which means that the original bottle of 35 tablets (1mg specification) of Azivudine will be reduced from 270 yuan/bottle to about 175 yuan/bottle by the medical insurance payment price.

As the first domestic 3CL target new crown oral small molecule drug, the first offer of Centrin Pharmaceuticals Centrin is less than 40% of Pfizer Paxlovid (1890 yuan / course of treatment) and 50% lower than Merzadone Monoravir capsules (1500 yuan / course of treatment). According to the current relevant policy, as the first domestic 3CL new crown “class 1 innovative drug”, Xianoxin has automatically entered the “temporary medical insurance”, most regions individual payment of less than 100 yuan.

Junshi Biological also told the 21st Century Business Herald that the pricing is still in active communication with relevant departments, and will be declared and measured in accordance with the relevant national requirements to form a reasonable pricing. And according to the relevant national regulations, Mindvine will also be included in the temporary medical insurance drug catalog.

According to the performance forecast recently released by Junshi Biologicals, the company expects to achieve operating income of about 1.446 billion yuan in 2022, a decrease of about 64.07% year-on-year; and expects a net loss of 2.396 billion yuan in 2022, an increase of about 232.36% year-on-year. Right now, Pfizer Paxlovid has already gained better earnings, can Juniper seize the time window to get a strong performance? It remains to be verified by time.

Can vaccine companies break the game due to overcapacity?

The competitive landscape of the vaccine market is also of great concern to the industry. Following the 2022 earnings release, Pfizer said it expects demand for the new crown vaccine to fall 29% to about 65 million doses in 2023 as the U.S. federal government prepares to end a three-year public health emergency this spring and plans to end funding for the shot.

Indeed, declining vaccine demand is not a reality faced by Pfizer alone, either.

In 2022, a number of companies are clearly on a downward trend in their new crown vaccine-related business. According to forecast data from Airfinity, global vaccine production could exceed 9 billion doses in 2022, but by 2023 and beyond, vaccine demand could fall to about 2.2 billion to 4.4 billion doses per year.

The performance forecast released by domestic vaccine company Kangtai Bio on January 10 also shows that it expects a loss of 76 million yuan to 150 million yuan in 2022, down 106.02% to 111.87% compared with the same period of the previous year, and a net profit of 1.26 billion yuan in the previous year. The net profit after non-recurring gains and losses is a loss of 126 million yuan to 200 million yuan, a decline of 110.59% to 116.81% over the same period of the previous year.

For the reason of the significant decline in net profit, Kangtai Bio said in the announcement that during the reporting period, due to the significant changes in the vaccination environment of New Crown vaccine at home and abroad, the company’s sales of New Crown vaccine dropped significantly compared with 2021, while the company, in accordance with the relevant regulations and requirements of the enterprise accounting standards, made an assessment of the New Crown vaccine-related inventory goods, raw and auxiliary materials, self-made semi-finished products, production equipment and In addition, in accordance with the requirements of Enterprise Accounting Standards, the Company has provided for asset impairment of approximately RMB 785 million for the development expenditure of New Crown Inactivated Vaccine and expensed RMB 303 million for the Phase III clinical development expenditure of New Crown Inactivated Vaccine. The above factors together reduced the total profit by RMB 1.088 billion, and considering the effect of accrual and deduction, the net profit was reduced by RMB 816 million.

Likewise, the performance forecast issued by Concierto also shows that it expects to realize a loss in net profit attributable to owners of the parent company for the year 2022 compared with the same period of the previous year, realizing a net profit attributable to owners of the parent company of -830 million yuan to -996 million yuan.

For the reason of the loss, it also said that during the reporting period, the domestic and international market environment of New Crown vaccine has changed significantly, the demand for New Crown vaccine has shown a significant decline compared with the same period last year, the growth rate of global New Crown vaccination has slowed down, and the supply exceeds the demand in some areas, and the market competition has intensified, the sales revenue of the company’s New Crown vaccine products has dropped significantly compared with the same period last year, while the commercialization process continues to advance The company’s net profit attributable to the owners of the parent company was a loss due to the increase in selling expenses compared with the same period last year and the impairment of the inventory related to New Crown vaccine that showed signs of impairment.

However, there are many industry insiders who remain optimistic about the New Crown vaccine track.

Liu Lihe, executive director of CIC Scorch Consulting, told 21st Century Business Herald that there is still a lot of room for future expansion of New Crown vaccines, such as multivalent vaccines that use a mixture of antigens from several different strains, broad-spectrum neutralizing antibody-based vaccines that induce broad-spectrum antibodies through conserved regions of New Crown virus, and nasal, inhalation or oral delivery vaccines that change the mode of vaccination to achieve mucosal immunity.

“Currently neo-crown vaccines remain the vaccines with the most investment in human research and development, however there are still significant variables in how well future next-generation vaccine products can achieve blocked immunity. Overall, it is prudent to remain optimistic about the future trend of the neo-crown vaccine track.” Liu Lihe said.

In this way, overcapacity is a definite situation and the overall market space for subsequent new crown vaccines will become narrower and narrower, which is a common problem faced by the global market, and it remains to be seen whether new crown vaccine layout companies can break out of the game.