Some health companies' quarterly earnings were boosted by COVID-19 products in the past few years, and most are starting to see a shift away from pandemic profits for 2023.
Wells Fargo analyst Mohit Bansal said as much about three companies reporting earnings this week: "COVID is pretty much out of the models. Pfizer (PFE) is probably the only one in our coverage where it is still a significant part of it because it was their biggest business last year."
"You kind of have to look at Pfizer as two different businesses. They have an ex-COVID business and the COVID business," Bansal told Yahoo Finance.
But the company has been trying to pull the spotlight away from its COVID business, anticipating a decline in demand, and onto its broader pipeline, particularly as several blockbuster drugs will lose patent exclusivity in the next few years.
Pfizer expects a loss of $17 billion from its pending patent cliff, but CEO Albert Bourla said on an earnings call this week that there are 19 products in the pipeline that will balance out that loss from its internal pipeline and external acquisitions. Pfizer also projected a decrease in sales of both the vaccine, Comirnaty, and its treatment, Paxlovid.
Merck, meanwhile, has struggled with its COVID-19 business from the start. It failed to launch a vaccine, and its treatment, molnupiravir, has been a last resort for doctors. A recent study hasn't helped. The treatment has been linked to mutations of the virus — though none have been lethal or immune-evasive.
Still, its drug is being considered for use in China, and the U.S. is removing requirements of a COVID positive test in order to get access to the treatments, which could open up the market for the drug. In addition, the company has been producing COVID-19 vaccines for Johnson & Johnson (JNJ), which is also winding down its Covid business.
But Merck is also facing a patent cliff for its biggest blockbuster, cancer drug Keytruda, even as it is expecting a reformulation to extend the patent.
Meanwhile, Eli Lilly had a successful run with its COVID-19 monoclonal antibody, but the company recently took a hit on sales as the treatment is no longer effective against the latest variants. Its share of the COVID business is smaller, though.
Bansal noted that he had even forgotten about the antibody.
"Lilly is a really good growth story. ... I think today's weakness has less to do with the numbers, per se, and more to do with some rotation out of biotech and pharma," he said.
"Overall, COVID is pretty much going to be zero for them this year, and I don't think investors even think about (Eli Lilly's) COVID business," Bansal added.
The only other major COVID players, Moderna (MRNA) and Novavax (NVAX), are expected to report earnings and 2023 outlooks later this month. Both, along with Pfizer, face a shift to a commercial market for vaccines this year. The latter has struggled to gain traction in the U.S. and the government is no longer purchasing doses, the impact of which remains to be seen.
Pfizer's Bourla previously told Yahoo Finance he doesn't expect "that people will comply" with booster recommendations.
"Complacency will be getting in the way, so I see that volumes of people that will be getting the vaccines will be less," Bourla said.
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