Vaccine maker's revenue plunges 40 percent; can new crowns continue to drive drug company growth?

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German vaccine maker BioNTech, Pfizer’s new crown vaccine partner, announced earnings on Aug. 8, showing that second-quarter revenue and net profit both plunged about 40 percent year-over-year due to falling demand for vaccines. BioNTech shares fell by more than 10% during the day’s trading in the U.S., and were down 7.5% by the close of trading.

Other vaccine makers’ shares were also dragged down, with U.S. vaccine maker Moderna’s shares falling more than 2% on the day. So far this year, shares of Moderna and BioNTech have fallen by a cumulative 27% and 34%, respectively.

Another U.S. vaccine maker, Novavax, announced that it was halving its revenue forecast for the year, and the company’s shares closed down 5% and plunged 33.6% after the bell.

Currently, most of the vaccines supplied globally come from Pfizer/BioNTech and Moderna, although the third dose of the vaccine, which has been administered to populations in most countries in Europe and the United States, and the fourth dose of the vaccine, which has been administered to most vulnerable populations, has led to a significant reduction in demand for the new crown vaccine.

BioNTech has supplied 3.6 billion doses of vaccine worldwide. The company reported second quarter revenues and net income of €3.2 billion and €1.67 billion, respectively, both showing a decline of about 40% year-over-year.

BioNTech still maintains its revenue forecast of 13 billion to 17 billion euros for the full year, and its partner Pfizer late last month forecast full-year sales of $32 billion for the new crown vaccine.

The revenue forecast, however, is based on demand for new versions of the vaccine in the fourth quarter, and BioNTech expects to start delivering two vaccines against the Omicron variant as early as October, but the vaccine is still awaiting regulatory approval. In addition, BioNTech is also conducting clinical trials for a vaccine against the Omicron BA.4/BA.5 subtype variant, which is becoming globally prevalent, also expected to be delivered as early as October.

Also of note, BioNTech warned in its latest earnings report of a significant shortage of natural gas for commercial vaccine production, saying there is still some uncertainty about what the shortage will mean for operations, but that it does not expect a material impact on production at this stage and is taking steps to mitigate the risk.

Vaccine maker Moderna, which uses the same mRNA technology route as BioNTech, reported earnings last week that net income fell 20% year-over-year to $2.2 billion, despite a 9% increase in sales from a year ago to $4.7 billion. The company said it will deliver significantly fewer vaccines to the Covax International Vaccine Alliance, and deliveries to key customers such as the European Union have been delayed.

Moderna is also targeting the emerging Omicron BA.4/BA.5 variant for development. Last week, Moderna announced a $1.74 billion agreement with the U.S. to supply 66 million doses of the new version of the vaccine against BA.4/BA.5.

Novavax, another new crown vaccine maker that just received FDA approval this summer, lowered its 2022 sales by about 50 percent in its earnings report released Aug. 8, with adjusted full-year revenue in the range of $2 billion to $2.3 billion, well below its previous estimate of $4 billion to $5 billion.

Novavax produces a protein vaccine on a traditional technology route, and the company does not expect any new sales of the new crown vaccine to the U.S. market or the Covax Alliance this year.

As Novavax entered the U.S. market more than a year later than competitors Moderna and BioNTech, market demand has also fallen sharply. So far this year, only 3.2 million doses of Novavax vaccine have been ordered in the United States.

“Many people in the U.S. have already been vaccinated and booster dosed, and given that the existing vaccine doesn’t help much with BA.4/BA.5, and people are still getting infected even with the booster, people are getting tired of the virus and are less concerned about the health risks it poses.” Brad Loncar, founder of biomedical investment fund Loncar Investments, told Firstrade.

The revenues of Chinese vaccine makers are equally noteworthy. According to the companies’ earnings reports released in the first half of this year, for the full year of 2021, Kexin Bio achieved revenue of $19.375 billion and net profit of $14.458 billion; Conxino and Jiffy Bio revenues were also both boosted by the new crown vaccine business.

However, in terms of share prices, shares of Conxino in Hong Kong and A-shares have fallen by more than 80% and 70% respectively in the past year; shares of Jiffy Bio in A-shares have also fallen by more than 40% cumulatively in the past year.