Huge stockpiles of COVID-19 vaccines and treatments, along with a steep drop in revenues, tell a sorry tale of Big Pharma’s greed
What goes up must come down. Everyone understands that. Businesses know that only too well, because most industries face market cycles. Not the pharmaceutical industry, though, which is insulated from these highs and lows because demand for medicines never goes down, whether the economy shrinks or expands. Now, as the panic and scramble for vaccines becomes a dark memory, Big Pharma is learning how unsustainable its pandemic high of soaring profits was. With projected offtake tapering off sharply since early 2022, especially in the US, a clutch of drug giants is seeing revenues drop by over 40 per cent. These figures reflect poorly on their role during the COVID-19 pandemic, when profits mattered much, much more than patients.
The pandemic years were marked by one of the biggest tussles between rich and developing countries at the World Trade Organization (WTO) over intellectual property rights (IPRS). Why iprs? Because iprs, which include patents and trade secrets, had a direct bearing on the ability of the world to meet the demand for desperately needed vaccines and therapeutics to fight COVID-19 through a host of generic companies if they were allowed to override patents during the pandemic. This column covered the issue extensively and predicted from the start that it was a lost cause. The US and the EU, where the vaccines to fight COVID-19 were developed, would not allow even a temporary waiver because of the powerful lobby of Big Pharma.
Thus, some of the big names of the drug industry led by Pfizer were allowed a dream run when they made as much profit from their vaccines as from the rest of their portfolio put together. Pfizer had moved quickly to strike an alliance with a small German startup, BioNTech, which discovered the mrna vaccine to manufacture the new generation jab to fight the COVID-19 virus.
As millions died across the globe, some pharma companies made money hand over fist and hoped to do so for the next two to three years. In 2021, Pfizer notched up revenues of $81 billion, a 95 per cent jump over the previous year. Chairman and chief executive (CEO) Albert Bourla described 2021 as a watershed year for Pfizer, a year in which its vaccines and medicines set records in their patient reach. Even better records were set in 2022, when the pharma giant raked in revenues of $100.3 billion, an all-time high thanks to Comirnaty and Paxlovid, its vaccine and medication to treat covid-19. Revenues for its other pharma products grew just 2 per cent.
But now the story is changing, and all the major pharma companies that made a killing during the pandemic are finding their revenues plunging dramatically. In its just announced third-quarter performance for 2023, Pfizer has suffered a revenue fall of 42 per cent and a net loss of $2.38 billion, owing primarily to a huge stockpile of Paxlovid and Comirnaty. This sits greatly at variance with Bourla’s oft-repeated claims that Pfizer vaccines were very affordable and reaching all parts of the world. Another company going through the post-covid blues is Moderna, which posted a 2023 third-quarter loss of $3.1 billion. Moderna, an untested biotech company, became the darling of investors after it unveiled an mrna vaccine. Its market capitalisation rose astronomically to cross $150 billion at one point, although it had no products in the market in 2020. But that’s how the market works and fuels the greed of companies and investors. Moderna, like Pfizer, was among the pharma companies to benefit most from the spike in demand for COVID-19 vaccine and treatments by jacking up the price of vaccines at the height of the pandemic, ranging between $23.15 and $25.50 a jab. Another drug major, AstraZeneca, which became the largest supplier of COVID-19 vaccines, reported revenues of only $1.2 billion in the first half of 2021 because its vaccine cost only $2.15 a shot in the EU and slightly over $5 elsewhere, because it had promised to hold the price line till the pandemic lasted.
Should one call this turn in the fortunes of these companies their just desserts? One of the saddest aspects has been their determined opposition to share their know-how in any way. Corporate greed prevailed even during the worst pandemic the world has known in 100 years and leaders of the developed world did not have a problem with that. Blocking the Agreement on Trade-Related Aspects of Intellectual Property Rights (trips) waiver was, of course, the most obvious way. Some others were more direct in their endorsement of corporate rapacity as when former British Prime Minister Boris Johnson told his party members in 2021 that “the reason we have the vaccine success is because of capitalism, because of greed my friends.” Fortunately for millions in the developing world, not least in India, the British drug major AstraZeneca did not follow the general trend and held the price line close to a not-for-profit cost. The company has reported a 16 per cent rise in revenues for the first half of 2023.
Such examples have been rare; pharma companies have kept profits before everything else. They did not even extend a hand to help research on their own drugs. For instance, when researchers in a critical clinical trial in Africa sought supplies of Paxlovid to test the efficacy of the drug in African populations, Pfizer denied the request. Its excuse was that the company had plans to conduct similar trials. The results of those trials were never made public, if at all they were conducted. The Drugs for Neglected Diseases Initiative (dndi) had undertaken a large study in 10 African countries in order to find treatments for mild to moderate covid-19. Asked by the science journal Nature why it was refusing to give the small amounts of Paxlovid that had been requested, Pfizer had been churlish—and pompous. It had said the company “was focusing its efforts and resources in a way that maximizes availability of our overall supply”. This had enraged public health activists, who had already labelled Pfizer and its boss as “pandemic profiteers” and strongly criticised its “appalling conduct” during the pandemic, to no end.
The latest financial report on Pfizer’s operations revealed a $5.6 billion inventory write-off, primarily on account of having to take back millions of unused Paxlovid doses from the US government. What an irony!
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