The future Covid-19 vaccine market could be worth more than $10bn a year, generating bumper revenues for pharmaceutical companies that have funded large parts of their research with government money.
The calculations by analysts at Morgan Stanley and Credit Suisse assume that people will need to take a Covid-19 vaccine every year, like a flu jab, and are based on projected costs for the shot, currently hovering at about $20 a dose.
“My base case assumption right now is that you will need annual vaccinations,” said Matthew Harrison, an analyst at Morgan Stanley. “[Covid-19] is not going to go away.”
Even taking a “conservative approach” in which only those people who get a flu vaccine also take one for Covid-19, the market would be worth $10bn across developed countries, he said.
Latest coronavirus news
Follow FT's live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.
Evan Seigerman, an analyst at Credit Suisse, estimated that the market could be even larger and worth $10bn in the United States alone.
The size of the market — equivalent to the annual revenue from ten blockbuster drugs — shows the potential opportunity for an industry that has received billions of dollars of government investment in the past eight months and how it could profit from that public funding.
Stephen Hoge, president of Moderna, which could submit trial data on its Covid-19 vaccine to the US regulator by the end of the month, said he believed vulnerable people would want to continue to get booster shots for a while.
“It’s a smaller opportunity [than flu]. It’s not a trivial one,” he said, adding that the medical costs of treating the disease run into the “billions of dollars”.
Mr Hoge compared the potential market for a Covid-19 vaccine to the market for the inoculation against respiratory syncytial virus, which mainly affects children. Moderna is developing vaccines for RSV and flu, and either could be combined with a Covid-19 shot.
AstraZeneca and J&J, which also have Covid-19 vaccines under development, declined requests to discuss the potential of the Covid-19 vaccine market. Merck and Pfizer were not available to comment prior to publication.
Executives at major pharma companies and the UK government’s chief scientist have all said they believe Covid-19 will become an endemic disease.
David Ricks, chief executive of Eli Lilly, which is developing an antibody treatment for Covid-19, said last month he expected long-term demand for the drug, predicting that not everyone would be vaccinated and that the disease would continue to spread.
Unlike flu, the virus behind Covid-19 does not rapidly mutate. But there are concerns about how long a natural immune response lasts and scientists do not yet know how long vaccine-triggered immunity will endure. The size of the market will depend on whether it needs boosting annually or less often.
“That’s really the key unknown . . . We don’t know how long folks are protected,” said Mr Seigerman at Credit Suisse.
The market is unlikely to be winner-takes-all, according to Geoffrey Porges, an analyst at SVB Leerink. While supply is constrained during the pandemic, every approved vaccine will be needed. But, after, companies are likely to compete on how effective their vaccine is, especially in elderly populations, and may find established relationships from distributing a regular vaccine like the flu shot are an advantage.
The Covid-19 vaccine was set to be a “moneymaker” for the pharma industry, said Zain Rizvi, a researcher at consumer advocacy organisation Public Citizen.
“Governments are focused on getting a good deal in the short term, but they have refused to ensure that the vaccines will be affordable and available to everyone in the long term,” he said.
Get alerts on Coronavirus treatment when a new story is published