WHAT JUST HAPPENED?
Pfizer Inc and Moderna Inc have raised the prices of their COVID-19 vaccines in their latest European Union Supply Contracts.[1]
WHAT DOES THIS MEAN?
The latest supply agreement means that the new price for the Pfizer shot would be 19.50 euros ($23.15) against 15.50 euros previously whilst the price of a Moderna vaccine would be $25.50 a dose, the contracts show, up from about 19 euros in the first procurement deal but lower than the previously agreed $28.50 because the order had grown.[2] Such transition creates a stark contrast with Astrazenca’s operation, which recently commented that the organization will not make a profit from the shot during the pandemic but hopes to eventually generate earnings to make the business sustainable.[3] The price of these two vaccines has increased because of calls for booster shots and the spreading of more infectious variants which have underpinned demand for the most effective products.[4]
Subsequently, the European sentiments are shared by their African counterpart, in particular Nigeria who recently had 4 million doses of the Moderna COVID-19 vaccine arriving at the country in two planes. The product was transported after the vaccine was received by officials from the UN children agency UNICEF on behalf of Nigeria at the Nnamdi Azikiwe International Airport.[5]
The terms of this new European supply deal that was agreed this year for a total of 2.1 billion shots until the year 2023 were renegotiated after phase 3 trial data showed that their messenger ribonucleic acid vaccines had higher efficacy rates than cheaper shots developed by Oxford/AstraZeneca and Johnson & Johnson.[6]The European Commission said on Tuesday that the EU is on course to hit a target of fully vaccinating at least 70 percent of the adult population by the end of the summer. As such, the need for these two vaccines is sky-high to meet that target.[7]
HOW DOES THIS IMPACT THE LEGAL SECTOR?
Pfizer last week raised its guidance for annual vaccine revenue by nearly a third to $33.5bn, after-sales of the shot helped almost double sales in the second quarter. The revenue gap between mRNA vaccines, whose genetic instructions prompt cells to make viral proteins that prime the immune system, and more traditional rivals that contain either viral proteins or an inactivated virus, is set to widen further next year according to forecasts compiled for the FT by Airfinity.[8]
The life sciences consultancy predicts sales of Pfizer’s shot will hit $56bn with Moderna’s reaching $30bn, as they dominate the high-income markets. Their sales will drive even further as growing list of large U.S. employers are requiring some or all employees to be vaccinated against COVID-19. For example, Facebook announced that employees must get vaccinated before coming back to the office whilst Netflix is requiring vaccines for the casts of all its US productions, as well as those who come in contact with the cast members.[9] The vaccine policy integrated by these businesses may apply to their employees in Europe
The EU contracts were struck at a complex moment in the bloc’s vaccine rollout, as it faced supply problems from AstraZeneca and J&J as health authorities probed a suspected link between their shots and rare blood clots. Brussels was also battling criticism from member states led by Austria that accused the European Commission of “unfair” vaccine distribution, arguing that the EU system had left some countries short on supply.[10]
With the COVID-19 vaccine market set to reach $19.5 billion by 2026, one needs to consider the wider implications that could be created for the current players in this market. Accordingly to GlobalData, the launch of a nanoparticle vaccine from Novavax[11] and the protein vaccine from Sanofi and GlaxoSmithKline will potentially decrease the market share of MRNA vaccines to 85% by 2026, but Pfizer and Moderna vaccine will still remain dominant. Consequently, the market share of adenovirus vector-based vaccines from AstraZeneca and Johnson & Johnson will be suspected to decrease due to the lower efficacy and lack of contract renewal in Europe.[12]Thus, the eminent growth of Pfizer and Moderna may lead them into becoming monopolies of this market, further resulting in actioning potential anti-competitive conducts in the future such as price discrimination or potentially even a deadweight loss if the rate of vaccine hesitancy and skepticisms over particular jabs increases.
Written by Amarjit Singh
ASSESSING FIRMS:
#Bristows LLP #CMS #Covington & Burling LLP #Herbert Smith Freehills LLP #Hogan Lovells International LLP #Allen & Overy LLP #Arnold & Porter #Baker McKenzie #Bird & Bird LLP #Gowling WLG #Simmons & Simmons #Clyde & Co LLP #Cooley (UK) LLP #DAC Beachcroft LLP #Goodwin #Kirkland & Ellis International LLP #Osborne Clarke LLP #Pinsent Masons LLP #Powell Gilbert LLP
REFERENCES:
[1]Sabahatjahan Contractor, ‘Pfizer and Moderna raise prices for COVID-19 vaccines in EU- FT’ (Reuters, Dated 1st August 2021)
[2] Sabahatjahan Contractor, ‘Pfizer and Moderna raise prices for COVID-19 vaccines in EU- FT’ (Reuters, Dated 1st August 2021)
[3] Pushkala Aripaka and Alistair Smout, ‘AstraZeneca COVID-19 sales jump as drugmaker navigates vaccine challenges’ (Reuters, Dated 29th July 2021)
[4] Donato Paolo Mancini, ‘Pfizer and Moderna ramp up EU Covid vaccine prices’ (The Financial Times, Dated 1st August 2021)
[5] Abankula, ‘4 million doses of Moderna COVID-19 vaccine arrive Nigeria’ (PMNEWS, Dated 1st Augist 2021)
[6] Donato Paolo Mancini, ‘Pfizer and Moderna ramp up EU Covid vaccine prices’ (The Financial Times, Dated 1st August 2021)
[7] ‘Pfizer and Moderna raise prices for Covid-19 vaccines in EU’ (The Straits Times, Dated 1st August 2021)
[8] Donato Paolo Mancini, ‘Pfizer and Moderna ramp up EU Covid vaccine prices’ (The Financial Times, Dated 1st August 2021)
[9] Alexis Benveniste, ‘ Walmart, Google among companies rolling out COVID vaccine requirements for employees’ (Abc News, Dated 31st July 2021)
[10] Donato Paolo Mancini, ‘Pfizer and Moderna ramp up EU Covid vaccine prices’ (The Financial Times, Dated 1st August 2021)
[11] See Keith Speights, ‘How Novavax Could Shake Up the COVID Vaccine Market’ (Nasdaq, Dated 1st August 2021)
[12] ‘COVID-19 vaccine market set to reach $19.5bn by 2026’ (Pharmaceutical Technology, Dated 23rd July 2021)
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.