Analyst tips first wave of COVID-19 vaccines to generate $20b

The scale of the unmet need created by COVID-19 has been clear for months. With the virus killing people and throttling economies around the world, governments have been desperate for a vaccine. What has been less clear is the magnitude of the near-term commercial opportunity.

That has begun to change as the US government has published details of its contracts with many of the leading developers of COVID-19 vaccines. Armed with that information, Gal calculated the near-term financial opportunity in a note to investors.

Gal thinks the initial wave of vaccinations needed to start bringing the virus under control may generate revenues of around $20 billion. The estimate assumes the US will pay a slight premium to other developed markets.

What happens beyond 2021 is less clear. At this stage, it is unclear how long immunity conferred by the vaccines will last. If annual booster shots are needed, vaccine manufacturers could continue to generate sizable sales for years to come, particularly if they are able to charge governments prices that more accurately reflect the value of their products after the pandemic ends.

For now, the focus is on showing the vaccines work and scaling up manufacturing to quickly meet the current pent-up demand. Based on company disclosures, Gal expects vaccine manufacturers to have enough capacity to meet demand in the developed world.

Gal modeled that AstraZeneca, Johnson & Johnson, Moderna, Novavax, Pfizer, and Sanofi, the six big vaccine developers covered in the analysis, have capacity to supply more than 5 billion doses.

How soon those products get to governments depends on when the vaccines get regulatory approval and the speed at which manufacturing ramps up.

Gal’s model has three vaccine developers — Pfizer, Moderna, and AstraZeneca — shipping products this year. Those companies are predicted to ship enough products to vaccinate 158 million people by the end of the year.

The big vaccination push will come early in 2021. Gal predicts J&J, Novavax and Sanofi will start shipping vaccines in the first quarter. With the first three vaccine manufacturers to market continuing to ship products, Gal predicts the authorization of the new candidates will give countries the capacity to immunize 709 million people by the end of March.

If accurate, the forecast suggests developed countries could have enough vaccines to immunize their populations by the end of the first quarter. There are around 1.1 billion people in the US, Canada, the UK, the European Union, Japan and Korea, the developed markets Gal expects to buy up most of the first vaccines.

That forecast is underpinned by the expectation that manufacturers, particularly J&J and Sanofi, will make big volumes of vaccines before winning approval. Gal expects J&J and Sanofi to each distribute  enough vaccines to immunize 100 million people in their first month on the market.