Frankfurt In 2021, the corona pandemic gave the pharmaceutical industry the biggest jump in sales in decades. Overall, the industry generated additional sales of almost $100 billion last year with vaccines and drugs against Covid-19. In the current year, Covid revenues are likely to be even higher before falling significantly again from 2023. This is the result of an analysis of the quarterly figures and forecasts of the leading pharmaceutical companies available so far, as well as analyst estimates.
According to Handelsblatt calculations, the 20 top-selling listed drug manufacturers increased their pharmaceutical revenues by a total of 25 percent last year to a total of around 715 billion dollars. A good 16 percentage points of growth were attributable to the business with Covid vaccines and drugs alone. The product group was thus the second largest single category in the pharmaceutical market after cancer drugs.
In contrast to the previous year, when the pandemic still slowed down the pharmaceutical business, the industry benefited massively from the fight against the viral disease in 2021. The individual performance of the companies varied greatly. A good half of the top 20 companies were represented in the Covid business with significant sales – many other companies, including the German manufacturers Bayer, Boehringer and Merck, were not at all.
By far the strongest player in the Covid area is the US pharmaceutical giant and industry leader Pfizer, which posted sales of almost $37 billion in 2021 with the Comirnaty vaccine researched by Biontech, increasing its total sales by 94 percent.
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In addition to the US group, their partner Biontech and the US company Moderna are among the big winners in the Covid business. Thanks to the proceeds from their vaccines, the two biotech companies, which in the past had practically no product sales, have suddenly risen to become one of the 20 top-selling pharmaceutical companies in the world.
The two biotech climbers will only be able to present their exact annual figures in the coming weeks. According to Bloomberg, analysts estimate the proceeds for Biontech at almost 20 billion dollars and for Moderna at around 18 billion dollars. The pharmaceutical companies Astra-Zeneca and Johnson & Johnson with vaccines and the biotech companies Gilead and Regeneron with antiviral drugs also benefited to a greater extent from the pandemic-related demand.
Regeneron grew its revenue by about 90 percent at a similar rate to Pfizer, with nearly 70 percentage points of the growth coming from sales of its antibody drug Regen-Cov. Gilead increased its sales by 10 percent thanks to the Covid drug Veklury, although the traditional business shrank slightly.
Margins in the Covid business often exceed 50 percent
The earning power of the pharmaceutical industry also benefited greatly from the Covid effect and improved overall even more than sales. Total net profits according to official accounting rules increased by three quarters to around $190 billion. The Covid business, which is characterized in part by margins of more than 50 percent, is likely to have contributed an estimated $40 billion.
A number of special effects also played a role. At Bristol-Myers-Squibb and Abbvie, for example, there were no acquisition-related charges that had depressed profits in the previous year. Novartis benefited from high special income from the sale of a stake in domestic competitor Roche.
Adjusted for special items, net profits for the top 20 companies rose an average of about 40 percent to about $235 billion, which includes earnings from some companies with non-pharmaceutical activities such as medical devices, diagnostics and over-the-counter health products.
In addition, the pharmaceutical business for the industry was relatively solid, regardless of the corona boom. If you exclude the Corona funds and some larger acquisition effects, organic sales growth on a dollar basis of around seven percent is calculated for the top 20 companies.
>> Read here: New drugs against Covid give hope – and promise manufacturers billions in profits
The Danish diabetes specialist Novo Nordisk, the British Astra-Zeneca and the US group Merck & Co. grew at an above-average rate, each with growth rates of around 15 percent in their traditional business. Astra-Zeneca and Merck continued to benefit from the strong performance of their cancer drugs. In addition, a number of companies felt a kind of catch-up effect after the lockdown effects had slowed down the sale of medicines in the previous year.
Further growth is on the horizon
In the current year, the industry should continue to grow, both with Covid therapies and other drugs. According to previous forecasts from companies and analyst estimates, the Covid business is expected to grow by at least a tenth to more than $110 billion. A large part of this is already secured by supply contracts with governments.
Pfizer alone has promised around 54 billion dollars in sales in the Covid business on the basis of such contracts. The new drug Paxlovid, which has now been ordered by the USA and other countries, accounts for around 22 billion dollars of this. Here the volume of orders could increase further, because Pfizer is still negotiating deliveries with numerous other governments.
>> Read here: Unprecedented leap in earnings: Thanks to the corona vaccine, Pfizer is again number one in the pharmaceutical industry
Analysts also expect increasing Covid revenues for Astra-Zeneca, GSK, Merck & Co. and for the biotech company Novavax, whose vaccine has now been approved in the EU and a number of other countries.
However, the uncertainties in the forecasts are still high in some cases. Analysts see more than four billion dollars in sales potential for Novavax. So far, however, it is unclear how high production and delivery quantities can be.
Merck & Co. has so far announced sales of around six billion dollars for its drug Lagevrio. Here, however, the prospects have recently clouded over after the US Food and Drug Administration (FDA) restricted the use of the drug to patients for whom no other drugs were available. In Europe there is speculation that Ema might not even approve the active ingredient.
In addition, it is becoming apparent that the Covid business will generally normalize to a large extent from 2023, since a high level of basic immunity in the population should then have been reached. Most analysts therefore expect that the vaccine revenues of the leading manufacturers will fall to single-digit billions. Demand for medicines is also likely to be significantly lower after the large stock orders have been delivered.
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