Interactive Investor

Pfizer gets massive boost from Covid vaccine profits 

5th May 2021 13:32

Graeme Evans from interactive investor

AstraZeneca is making nothing from its Covid jab, but the US firm has banked a fortune.

A Covid-19 vaccine only unveiled to a grateful world in November is poised to account for more than a third of Pfizer (NYSE:PFE) annual sales after the US drugs giant upgraded guidance last night.

Pfizer now anticipates potential revenues of $26 billion (£18.7 billion) this year from the delivery of 1.6 billion doses of the jab it developed with Germany's BioNTech (NASDAQ:BNTX).

But as this increase from $15 billion (£10.8 billion) is based on contracts signed through to mid-April, there's still the potential for significantly higher revenues given the two companies have the capacity to produce up to 2.5 billion shots.

Already the best-selling product in the Pfizer portfolio, the two-shot Covid-19 vaccine is seen by chief executive Albert Bourla as offering “durable” demand similar to the flu vaccine, given the likely need for regular boosters to maintain levels of immunity. 

Pfizer, unlike UK-based rival AstraZeneca (LSE:AZN), will make a profit on its jab and has revealed an adjusted income margin on the vaccination in the high 20s as a percentage of revenues. That puts the potential profit in the region of $6.5 billion (£4.7 billion) or more this year.

AstraZeneca said last week that it had generated $275 million (£198 million) from sales of its not-for-profit vaccine in the first quarter, whereas Pfizer has just reported $3.5 billion (£2.5 billion).

Total revenues across the US group were $14.6 billion (£10.5 billion) in the quarter, with full-year guidance now in the range of $70.5 billion (£50.8 billion) and $72.5 billion (£52.2 billion) as a result of the vaccine, an increase of about 18% on previous forecasts. 

Excluding the vaccine boost, Bourla noted that revenues growth of 8% was well above the company's stated target of at least 6% through to 2025. Strong performers included Eliquis, which is used to prevent blood clots and grew first quarter sales by 25%.

Full-year guidance is now for earnings per share in the range of $3.55 and $3.65, compared with $3.10 and $3.20 previously and representing a 59% jump on the result for 2020.

The company has declared an unchanged dividend of $0.39 a share for the second quarter, which is set to mean a 12th year in a row of increased payments for Pfizer shareholders who also hold shares in its Viatris spin-off.

Viatris was created following November's merger of its Upjohn off-patent business, which included Viagra and cholesterol drug Lipitor, with Mylan. Pfizer now operates as a focused biopharma company.

Its shares spiked at more than $42 in December after the vaccine breakthrough, only to fall back to $34 in late February amid a fresh wave of coronavirus infections. They are now trading at around $40 a share, which compares with the price target of $38 held by analysts at Morgan Stanley. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.