End of the vaccine boom: Biontech has to act after Pfizer’s forecast correction

End of the vaccine boom
Biontech has to act after Pfizer’s forecast correction

With its corona vaccine, Pfizer and Biontech are making a significant contribution to ending the corona pandemic. However, the need for the vaccine is also collapsing. Both companies have to take billions in depreciation.

The Mainz-based biotech company Biontech is feeling the slump in demand for corona vaccines more than expected. After the US partner Pfizer announced a drastic reduction in its sales and profit targets as well as billions in depreciation a few days ago, Biontech is also examining the effects on its business. For the third quarter, the company therefore expects depreciation of up to 900 million euros, as Biontech announced. This corresponds to half of the gross profit share from the agreement with Pfizer. “Any such write-downs will reduce the revenue the company would report for 2023.”

Biontech shares fell significantly on the Frankfurt stock exchange. The company does not want to comment on its annual forecast. So far, Biontech expects sales of Covid vaccines of around five billion euros this year – in the first half of the year it was only 1.4 billion. Last year, the vaccine brought 17.3 billion euros into the coffers. But the company has been expecting seasonal demand for vaccinations for a long time, which is why Biontech had forecast the corresponding sales for the second half of the year. The new vaccine from Biontech and Pfizer, adapted to the Omicron sub-variant XBB.1.5, has been available for vaccinations for around a month.

The sudden end of the Corona boom, which had brought them billions in sales, became noticeable to vaccine manufacturers in the second quarter. Biontech therefore wrote a net loss of a good 190 million euros after a profit of almost 1.7 billion a year ago and already in August referred to write-offs by its partner Pfizer on stocks of the Covid vaccine Comirnaty that had expired or were about to expire exceed.

Pfizer meets annual targets

The US company Pfizer massively lowered its annual targets on Friday because business with its Covid-19 drug Paxlovid and the Comirnaty vaccine developed together with Biontech was weaker than expected at the end of the corona pandemic. Write-downs and charges in the third quarter therefore total $5.5 billion, of which $4.6 billion is attributable to Paxlovid and the rest to Comirnaty.

According to Pfizer, the write-downs do not concern doses of the newly updated vaccine, but mainly raw materials such as lipids for the vaccine formulation that were purchased during the pandemic, as well as doses that were adapted to variants other than XBB.1.5.

For 2023, Pfizer now expects sales of $58 billion to $61 billion instead of $67 billion to $70 billion and earnings per share of $1.45 to $1.65 (previously: $3.25 to 3.45). The US government is returning emergency stocks of around 7.9 million Paxlovid treatment units to Pfizer, resulting in a loss of $4.2 billion in sales for the company.

Pfizer lowered its sales expectations for Paxlovid for this year by a total of around seven billion dollars and those for Corminaty by around two billion – due to lower than expected vaccination rates. Last year, Pfizer brought in more than $56 billion in sales with both products.

The group announced a savings program that is expected to bring in at least $3.5 billion by the end of 2024. Part of the project also includes job losses. It is still unclear how many jobs will be cut in which areas.

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