Even though Covid-19 cases and hospitalization numbers are up, they won’t be a shot in the arm for either Moderna or Pfizer stock.
Pfizer (NYSE:PFE) closed at $32.69 per share, down by 36.2% year to date on September 22. Moderna (Nasdaq:MRNA) ended the week on a better note, at $99.99 but is down by over 44% since the beginning of the year. That’s in striking contrast with how the market has been performing this year. S&P 500 has grown 12.5% and tech-heavy Nasdaq spiked 26.23% since January.
As the world gets used to living with Covid around and vaccine demands dwindle,neither the companies nor investors are expecting another surge in revenue like the companies saw in 2021. For the shares to rebound, Pfizer will have to find new blockbuster drugs and Moderna will need to diversify its portfolio.
“I think it’s just a matter of them having other products and success with those other products,” Yan Zelener, the director of research and portfolio manager at Humankind Investments, which specializes in socially responsible investing.
Humankind, which holds shares of both Pfizer and Moderna, looks at long term analysis, rather than short term stats, and invests in organizations promising positive impact on human life expectancies and healthcare research. Currently they are interested in the new technologies in the medical sector, such as RNA interference technology, for instance.
“I think the vaccine at this point is a backward looking story,” Zelener said.
Both Pfizer and Moderna’s stocks spiked by the end of 2021 because of wide Covid-19 vaccine distributions. Pfizer closed the year with $55.4 per share, a 66.7% increase from the same time in 2020. At the same time, Moderna’s shares had increased by 143.11%, finishing the year with $253.98 a share, compared to the year before.
This year their revenues are significantly lower than last year. Pfizer reported second-quarter sales of $12.73 billion, 54% less from a year ago. Similarly, Moderna’s total revenue in the second quarter plunged to $344 million from $4.75 billion in 2021.
Now both Pfizer and Moderna are on the track of diversifying and broadening their pipelines. Earlier this month Moderna announced the late-stage trials for its new mRNA-based flu vaccine were showing better results than the currently available flu shots, getting closer to securing approval from FDA. This briefly revived investor’s interest in the company’s shares, but that interest has dwindled in the past few days.
Moderna also estimates it will spend around $25 billion on research and development and is planning to launch 15 new products in the next five years.
Pfizer also has ambitions for the year ahead. Even though second quarter revenue of $12,7 billion was significantly lower than the $27.7 billion it amassed last year, Pfizer is using its large cash reserves to pay off debts and broaden its pipeline. The New York-based drug manufacturer plans to unravel19 new products in the next 18 months. It’s also making large acquisitions. Pfizer bought Biohaven Pharmaceuticals last year and is set to spend $43 billion for Seagen, a biotech company specializing in cancer medicines.
Pfizer estimates that Seagen’s marketed oncology drugs will bring in around $8 billion a year. That will help the pharmaceutical giant meet over 80% of its target acquisition-based revenue of $25 billion by 2030.
Pfizer is also trying to enter the weight loss drug market that’s been driving the healthcare sector in the past few months.
Earlier this year Pfizer had to stop developing the once-a-day pill because the trials showed elevated liver enzymes. Now it’s studying a twice-a-day pill, which seems to be working, according to its reported study results.
According to Barclays, these drugs might have a $100 billion value on the global market by 2030. Pharma giants like Novo Nordisk and Eli Lilly, producers of Ozempic, Wegovy and Mounjaro respectively, have indeed been bullish this year. Novo Nordisk (NVO) rose almost 35% year to date and Eli Lilly (LLY) gained over 50% since January. Pfizer will still be at a disadvantage though to these pharma giants.
“The med devices sector has gotten a big hit recently with obesity drugs potentially moving a lot of the addressable market and overtaking a lot of that stuff, but as far as the sector goes, pharma is still underperforming as a whole,” said Brian Tsang, a Global Pharma Equity Research Associate at Wolfe Research.
Even though some names are seeing a gain in share prices, the healthcare sector, which usually does well in uncertain economic conditions, has been shedding some weight, declining by 4.25% in 2023.