Pfizer Raises Covid-19 Vaccine Price 27%. What It Means for the Stock.

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Pfizer

has raised the U.S. price of its Covid-19 vaccine, in another sign that investors may be underestimating the durability of its Covid-19 vaccine revenue.

On Wednesday night,

Pfizer

(ticker: PFE) and its partner

BioNTech

(BNTX) said that they had signed a $3.2 billion deal with the U.S. government for 105 million doses of their Covid-19 vaccine, to be delivered late this summer and in the fourth quarter of the year.

That price of $30.48 per dose represents a 27% increase over the reported $24 the U.S. paid Pfizer and

BioNTech

per dose for 200 million in July of 2021. It is 56.3% higher than the $19.50 per dose the U.S. paid for an initial order of 100 million shots in July 2020.

The news came a day after the Food and Drug Administration’s advisers voted in favor of updating the Covid-19 boosters for the fall to protect specifically against the Omicron variant. That vote, as Barron’s argued at the time, represented a significant vote of confidence by public-health officials in the messenger RNA-based vaccines from Pfizer and

Moderna

(MRNA), and the central promise that they can be adapted quickly to confront a fast-changing virus.

Pfizer may have a leg up over

Moderna

in the fall booster market. Moderna has yet to announce a deal to supply the U.S. for the fall.

At the Tuesday meeting, the FDA’s advisers expressed a strong preference for a fall booster that targets both the original Wuhan strain of the virus and the newly-emerging BA.4/BA.5 Omicron subvariants. While Pfizer presented data on a BA.4/BA.5 vaccine in mice, and said it could have it ready for rollout under certain conditions in early October, Moderna said a BA.4/BA.5 vaccine might take until early November.

What’s more, ahead of the meeting, Moderna’s CEO had argued to Barron’s that the company could only make a BA.1-specific bivalent vaccine for the fall. That would target the original Wuhan virus and the initial strain of Omicron.

Pfizer shares were down 0.8% in premarket trading on Thursday, while

BioNTech
’s
American depositary receipts were up 1.2%. Moderna shares were down 1.1%.

Analysts currently expect a sharp drop off in Covid-19 vaccine revenue for Pfizer, from $33.9 billion this year to $16.3 billion in 2023, and $7.5 billion in 2024, according to FactSet. This deal could help build an argument against that drop-off. In addition to the 105 million doses contracted for delivery this year, the deal includes an option for 195 million additional doses, which could fulfill U.S. demand into next year.

In a note out early Thursday, SVB Securities analyst David Risinger wrote that the deal will likely raise Pfizer’s 2022 sales guidance by $3 billion, and that it has a “positive readthrough” for “Comirnaty tail revenue.”

One worry for Pfizer investors had been that the U.S. could shift to a commercial market for Covid-19 vaccines this year or next, leading to a drop in uptake. But Risinger says this deal removes that risk, given that the U.S. is buying so many doses. The price increases, too, show that Pfizer retains significant power in the market, he says.

“The consistent price increases with each contract suggest PFE / BNTX have some pricing power for Comirnaty even within the pandemic context and suggests future commercial pricing could be meaningfully higher,” Risinger writes.

White House officials had warned that the lack of Congressional action had imperiled the government’s ability to buy vaccine doses for the fall. In a statement Wednesday, the Department of Health and Human Services said that the administration had reallocated $10 billion of existing funding to pay for vaccines and treatments, and that the $3.2 billion for Pfizer was coming out of that pot.

Pfizer said that as part of the deal, it would supply doses at all authorized and approved dose levels, including for young children and adults. It said that the deal might also include Omicron-specific vaccines, if authorized by the FDA.

On Thursday, Pfizer said it had submitted to the FDA an application for approval of its Covid-19 antiviral Paxlovid. Paxlovid received an emergency use authorization from the FDA in December. The company says it has shipped 12 million Paxlovid treatment courses around the world as of the end of May.

Write to Josh Nathan-Kazis at [email protected]