A report from Reuters states that Pfizer envisions that demand for the COVID-19 vaccine will carry on for years.
The newspaper publisher reported earlier today that Pfizer had estimated an increase in their sales forecast of 70%, an increase to £26 billion.
This sales forecast is reportedly based on the already signed contract which issues 1.6 billion vaccine doses to be issued this year.
Pfizer also reported that it is in talks to supply nations with COVID vaccines throughout 2022, thus marking the likely reason behind the increased sales forecast.
The vaccine program has been extremely profitable for Pfizer with the company amassing a total of $3.5 billion from vaccine sales in the first 3 months of 2021.
This high sale was due to governments around the world panic buying vaccines in a desperate attempt to better public health.
This is due to the fact that public health is the driving factor behind confidence and economic outlook during the COVID-19 crisis.
This is because consumers are wary of the health risks associated with the virus. Therefore, because the virus is more likely to be spread when individuals are not obeying social distancing, governments have induced lockdown restrictions.
These restrictions have been imposed to prioritise public health, however, there is an opportunity cost which is economic confidence and activity.
These lockdown restrictions have negatively impacted businesses, especially small local ones which do not have the infrastructure necessary to compete with large firms such as Amazon who have the logistics to provide home delivery.
For this reason, various firms have seen a decrease or uncertainty around demand for their products and services, consequently, because firms are uncertain or have lost their profits, they have laid-off workers.
This is evidenced by the large Furlough payments which have gone to sectors such as hospitality and retail, sectors that have seen massive reductions in cash flow.
Therefore, because businesses and firms are laying off workers, normal households do not have the job security they once had leading to decreased confidence and an increase in the marginal propensity to save.
This has led to record saving during the pandemic as well as a massive reduction in aggregate demand within the economy as animal spirits have been the ruling factor for why consumers spend.
And public health is at the heart of this chain of confidence. If public health is not reinforced through vaccination programs, governments do not lift lockdown restrictions and economic inactivity stays constant, hence, the importance of these COVID vaccines is immeasurable for the economic bounceback of nations across the globe.
This of course makes it very profitable for Pfizer to supply these vaccines as they are in extremely high demand, and, the main buyers are governments that rarely default on payments.
Some may argue that it may be unethical for Pfizer to make a large quantity of revenue from the sales of vaccines as recently they do account for 33% of the firm’s sales, however, it is essential for the private firm to make a profit for it to continue supplying the vaccine.
Pfizer is not a charity, it is a private pharmaceutical company, meaning the firm works in an industry where drug development takes years and the risk is very high.
This means that Pfizer undergoes periods of high costs during its drug development, periods where the firm is taking high risks as the drug may not work. Therefore, a successful product, i.e. the COVID-19 vaccine, has to make the firm enough revenue so that it can recoup its losses.
Furthermore, the firm needs to make enough revenue from the sale of COVID-19 vaccines to also provide funding for future drug research and development.
So, although Pfizer’s method has resulted in not every nation being able to receive a supply of vaccines, it has enabled the firm to massively increase its production due to the profit motive which will enable them to increase production in future years.
Therefore it is highly likely that Pfizer will see sustained sales in the coming years as the firm will see demand from developed and developing nations alike as developed nations will continue to purchase the vaccine as they slowly eradicate the virus and the latter, such as India, will require large doses of the vaccine to combat recent outbreaks of the virus.
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Written by Hubert Kucharski
Research compiled by Billy Ryan