The first of the Western coronavirus shots cleared for use, the Pfizer-BioNTech vaccine will soon face competition from more entrants, including from Johnson & Johnson and Novavax Inc. that are poised for authorization. New virus variants may also require additional vaccines or reformulated booster shots for protection.

Pfizer’s position in the Covid-19 vaccine market may be difficult to sustain over time, said JPMorgan analyst Christopher Schott. Investors need to see further de-risking of Pfizer’s pipeline to support growth, he said in a note to investors.

What Bloomberg Intelligence Says

“We believe the view on operating margin is unnerving. Sales expectations of $59.4-$61.4 billion are $4 billion higher than consensus at the midpoint, with Covid-19 vaccine sales expected at $15 billion vs. consensus for $11 billion. The midpoint EPS goal of $3.15 is slightly below views, due to much lower gross margin and higher R&D costs.”

— Pharma analysts Michael Shah and Sam Fazeli

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Pfizer commands a higher price for its Covid-19 vaccine than some rivals. Under the terms of its supply deal with the U.S., it is charging $19.50 for each shot of the two-dose regimen. Meanwhile AstraZeneca Plc, which hasn’t yet gained U.S. authorization for its two-dose vaccine, has said it plans to charge less than $4 per shot, and J&J is aiming to price its single-shot vaccine at less than $10.

Pfizer’s vaccine sales projection primarily includes doses that are expected to be delivered this year under existing contracts, the company said as it reported fourth-quarter earnings.

Excluding those sales, Pfizer expects 2021 full-year revenue of $44.4 billion to $46.4 billion. Annual earnings per share will be $3.10 to $3.20. Bourla had said earlier this month that earnings would top out at $3.10 a share. The guidance was raised primarily because of the shifting vaccine outlook, according to the company.

Vaccine Sales

Based on mRNA technology that makes human cells into vaccine factories, the Pfizer-BioNTech shot was more than 90% effective in preventing Covid-19 symptoms in a late-stage clinical trial. It brought in $154 million in sales in the fourth quarter.

Pfizer and Germany’s BioNTech initially expected to produce 1.3 billion doses of the vaccine, known BNT162b2, this year. They later boosted their output goal to 2 billion doses after a label change allowed doctors to extract six doses instead of five from each vial, and they secured additional manufacturing capacity. The boon to supply will likely add to the companies’ sales.

To date, Pfizer and BioNTech have reached agreements totaling 836 million doses, according to Bloomberg’s Vaccine Tracker, including 300 million for the EU and 200 million for the U.S. Though executives declined to comment on the underlying number of doses accounted for in the 2021 forecast, they suggested more agreements with governments could still come, likely leading to an even larger sales figure.

Read More: Pfizer to Deliver U.S. Vaccine Doses Faster Than Expected

If the market were open to all purchasers, not just governments, Pfizer would expect to have the lion’s share of demand “because we are first, and we are best,” Bourla said to investors. “But this is not an open market, at least for this year,” he added, tempering expectations that the company would be able to sell all 2 billion doses before year end.

“This market creates a lot of political pressures,” he said. “The decisions aren’t always made on science.”

Evercore ISI analyst Umer Raffat expects Pfizer to ultimately bring in more vaccine sales than it forecast Tuesday. “I do think the number is going to tick up,” he said in an interview.

The drugmaker may generate additional revenue from a booster shot it’s developing to combat a rapidly spreading variant that emerged in South Africa, according to Raffat.

Pfizer sees its vaccine as highly effective against variants because of the high levels of antibodies it raises. Still, the company aims to start a study comparing a third booster dose customized against a key mutation seen in the South Africa and Brazil strains that would be given six to 12 months after the first two doses. If booster shots continue to be needed after the pandemic is over, Pfizer will likely get a higher price for the vaccine, executives said.

Innovation-Focused

The drug giant’s overall fourth-quarter figures were anticipated to be messy following the spinoff of its off-patent drug unit, Upjohn, into a combined company with Mylan NV now known as Viatris Inc.

The new, slimmed-down Pfizer brought in $11.7 billion. Major blockbusters, including the cancer drug Ibrance, the anticoagulant Eliquis, and the Prevnar vaccine franchise drove much of the company’s growth.

Pfizer spent more than $9 billion on research and development, including on its pandemic response efforts, in 2020. Bourla cited the company’s “decade-long conversion into a pure-play, science and innovation-focused company,” for the company’s progress.

“Our record-breaking success at developing a vaccine against Covid-19, along with our partner BioNTech, is just one example of what we believe this new Pfizer is capable of achieving,” he said in the statement.