These companies are used to accelerating revenue drops known as patent cliffs, which occur when their exclusivity on big-selling drugs expires and generic rivals move in, but they can last for years. Strategize for those swings.
“When you think about the longevity of traditional medicine and vaccine development and sales, it’s usually pretty spread out,” said Morningstar analyst Damian Conover. “It’s very, very focused.”
The sudden influx of revenue should prompt companies to strike deals and tie up with new partners, he said.
Evan Siegerman, analyst at BMO Capital Markets, said companies should be using quick cash to fund transformational deals.
Referring to the $5.4 billion purchase of Global Blood Therapeutics and the $11.6 billion purchase of migraine drugmaker Biohaven Pharmaceutical, he said, “Pfizer did these $10 billion deals to build their portfolio and I think they’ve got something big.” needs to be more effective.”
Pfizer has been the biggest corporate beneficiary of the pandemic financially, with revenue expected to exceed $56 billion in 2022 from a vaccine developed with German partner BioNTech and from its COVID-19 antiviral treatment Paxlovid.
Pfizer has said it expects revenue to drop to about $21.5 billion in 2023, though some analysts believe the forecast is overly optimistic.
“We suspect that COVID will drive revenue through 2024 and beyond,” JPMorgan analyst Chris Schott said in a research note.
Vaccine maker Moderna also expects revenue to decline sharply in 2023. The company’s sole product — its messenger RNA COVID vaccine — is expected to pull in about $18.4 billion in 2022. Analysts expect that to drop to around $7 billion in 2023. The company is due to report earnings later this month.