The sluggish demand for corona drugs is putting a strain on the business of pharmaceutical companies. The German vaccine manufacturer BioNTech has to take high write-downs and the share price collapses.
The manufacturers of corona preparations received a lot of public attention during the pandemic and made billions in profits. The end of the pandemic has now resulted in considerable uncertainty for pharmaceutical companies when planning their business.
High depreciation
This became apparent on Friday when the American pharmaceutical giant Pfizer drastically lowered its sales and profit targets due to the collapse in demand for corona drugs. The industry leader now expects annual sales of between $58 and $61 billion. Previously, Pfizer had assumed 67 to 70 billion dollars.
Depreciation and charges totaled $5.5 billion in the third quarter. Of this, the lion’s share of $4.6 billion goes to the Covid drug Paxlovid, the rest to the Comirnaty vaccine developed together with Mainz-based BioNTech.
BioNTech shares collapse
BioNTech has now also announced that it will examine the burdens related to Comirnaty on its own business – and an initial estimate caused the share price to slip significantly on Monday. At times the paper lost over nine percent.
The company now expects depreciation of up to 900 million euros for the third quarter. This corresponds to around half of the gross profit share from the agreement with Pfizer. The majority of these write-offs are due to raw materials for vaccine production, such as lipids, that were purchased during the pandemic and ultimately not needed.
BioNTech has so far left its annual forecast unchanged. It envisages sales of around five billion euros from Covid vaccines. Last year it was 17.3 billion euros.
Annual forecast is shaky
By the first half of the year, the Mainz-based biotech company had only had sales of 1.4 billion euros, but expects sales to increase in the second half of the year. For a long time now, demand has been more seasonal, in line with classic flu vaccinations. The new vaccine from BioNTech and Pfizer, adapted to the Omicron sub-variant XBB.1.5, has been available for around a month.
BioNTech plans to publish its third-quarter figures on November 6th, and the annual forecast could be adjusted at this point at the latest.
Cyclical business is reflected in prices
The sudden end of the Corona boom had already had an impact on business in the second quarter. Due to write-downs on inventories of the Comirnaty vaccine, BioNTech posted a net loss of over 190 million euros after a profit of 1.67 billion a year ago.
The highly cyclical nature of the business is also reflected in the stock market. During the pandemic, the stock prices of Covid vaccine manufacturers had all reached record highs in 2021. But the more the pandemic came under control, the quieter things became about the vaccine manufacturers. BioNTech and its US rival Moderna have each lost around 80 percent compared to their records. Pfizer shares have lost around half since their record high.