KEY POINTS

  • Pfizer and BioNTech were given a larger initial order for omicron boosters by the U.S. government than Moderna.
  • The U.S. also pays a greater price for Pfizer’s-BioNTech booster than Moderna’s.
  • Moderna may still be the biggest winner because it doesn’t have to split its vaccine profits.

There is much competition in the Covid vaccine market, but Pfizer and BioNTech are winning in the booster market. To date, no company has released a coronavirus omicron variant booster. Despite this, Pfizer (NYSE:PFE) and its German partner BioNTech (NASDAQ:BNTX) are racing to do so. So is their top competitor, Moderna (NASDAQ:MRNA).

Even before the new vaccines are available, there’s a vast market for omicron boosters in the United States. And there appears to be an early winner. Pfizer and BioNTech appear to be outpacing Moderna in this market, at least for now.

Success on two fronts

The U.S. government has finalized supply contracts with Pfizer-BioNTech and Moderna, including their respective omicron boosters. Both deals cover up to 300 million doses each. However, a few crucial elements in the supply agreements provide Pfizer and BioNTech significant benefits.

The U.S. gave BioNTech and Pfizer a much larger beginning order than Moderna. The United States has ordered 105 million vaccine doses with Pfizer-BioNTech for delivery throughout the fourth quarter of this year. Moderna’s initial contract is for 66 million doses.

The Pfizer-BioNTech agreement states that it “may include adult Omicron-adapted COVID-19 vaccines.” At the same time, Moderna’s deal is only for its bivalent booster, which targets both the original coronavirus strain and omicron. However, it appears that the U.S. will primarily buy Pfizer-BioNTech omicron boosters rather than either company’s current version of COVID-19 vaccines. Albert Bourla, CEO of Pfizer, said during the company’s Q2 earnings call that it is targeting a fall launch for its omicron booster pending regulatory approval.

Second, Pfizer and BioNTech are charging a premium for their vaccines. The United States is spending $3.2 billion to obtain the first 105 million doses, which comes to an average cost of $30.48 per dose. In the meantime, Moderna will get “up to $1.74 billion” for the initial 66 million doses. The average price per dose is $26.36.

Pfizer and BioNTech are winning

Why were Pfizer’s and BioNTech’s terms more attractive than Moderna’s? Foremost, there has probably been a high demand for different COVID-19 vaccines thus far.

Patients have received more than 356.7 million doses of the Pfizer-BioNTech immunization. Moderna is in second place, with around 227.5 million vaccine injections as of July 27th.

The first boosters provided by BioNTech and Pfizer have also given them a significant lead, ahead of Moderna. While Moderna’s second booster counts were much closer, Pfizer and BioNTech are still in the lead with slightly over 11 million doses compared to slightly above 10 million doses for Moderna’s booster.

There may be several additional reasons. First, Moderna received significant federal government funding to help the firm develop its first COVID-19 vaccine, whereas Pfizer and BioNTech didn’t. Also, the Biden administration’s relationship with Pfizer appears to have been less adversarial than it was with Moderna (mainly owing to pressure for Moderna to provide more vaccines for low- and middle-income countries).

Where Moderna wins

On the other hand, Moderna has gotten a leg up over Pfizer and BioNTech in specific ways. The vaccine stock, for example, has risen more in recent weeks than its competitors’ stock.

Moderna’s outperformance might be because its new U.S. supply contract benefited Moderna more than Pfizer or BioNTech did with their agreement. Moderna may profit entirely from COVID-19 vaccine sales, while Pfizer and BioNTech split their profits fifty-fifty. As a result, Moderna’s omicron booster may eventually have a higher market demand than the competition. Even if not, the firm could still be the biggest winner because of Moderna’s absolute rights to its vaccines.

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