When receiving my jab last month (thankyou nurses at RBWH in Brisbane for your excellent care!) I couldn’t help wondering how much all these vaccines were costing.
From a purely supply and demand perspective, the drug companies should be able to name their price. How much would our government have paid for an extra 1m Pfizer doses delivered two months ago? How much did we pay Poland on the secondary market for 1m does last week?
So how much are they?
As it turns out, the answer depends upon what brand you receive.
Reported global prices for Pfizer are around AUD$35 per jab and AstraZeneca are around AUD$3. The price difference is staggering when put in context of the billions of doses required to vaccinate most of the global population.
Why so different?
The price difference is due to the vastly different profit motives for this particular vaccine. AstraZeneca is pricing their Covid vaccine on a not-for-profit basis, at least until the pandemic is under control. Johnson & Johnson have done the same with their Covid vaccine.
However Pfizer, Moderna and Novavax have made no such election and are generating profits… very large profits.
In the recent Pfizer 2Q earnings release, Pfizer upgraded 2021 revenue expectations for their Covid vaccine to US$27bn, which at that level will account for nearly one-third of the companies entire annual revenue. For AZN, the profit impact is expected to be zero.
The profitability of Pfizer’s Covid vaccine is impacting the share price. Year to date the shares are up nearly 40%, versus AZN only up 20% (in USD).
We own both Pfizer and AstraZeneca in our Global fund, and we contacted the Morningstar Healthcare Analyst in Chicago about what we felt was a potential ESG concern on pricing.