Pfizer (NYSE:PFE) made one of the smartest decisions in the company's long history earlier this year. It chose to partner with German biotech BioNTech (NASDAQ:BNTX) on the development and commercialization of its COVID-19 vaccine. And the rest, as they say, is history.
The companies' BNT162b2 COVID-19 vaccine became the first to win U.S., U.K., and Canadian emergency use authorizations (EUA). They lined up deals to supply hundreds of millions of doses through 2021.
Pretty much everything has gone right so far, but that might not always be the case. Billions of dollars could hinge on Pfizer's next major COVID vaccine move.
Cold, hard facts
Pfizer has a problem. BNT162b2 requires ultracold storage. How cold is ultracold? The vaccine must be stored at minus 94 degrees Fahrenheit for extended periods of time. That's much colder than winter in Antarctica and well below what conventional freezers can handle.
Sure, Pfizer and BioNTech developed a special shipper that uses dry ice to maintain the ultracold temperature. However, some states are opting to use Moderna's (NASDAQ:MRNA) mRNA-1273 COVID-19 vaccine in rural areas. Although mRNA-1273 uses messenger RNA technology as BNT162b2 does, Moderna created a formulation that can be stored in standard freezers.
Pfizer's problem isn't too significant at this point, though. Wealthy countries continue to buy BNT162b2, including the U.S. government's recent purchase of another 100 million doses. After all, there are only two coronavirus vaccines on the market. And Pfizer's price tag is more attractive than Moderna's.
But the dynamics could change dramatically if other COVID-19 vaccines receive EUA. The logistical challenges associated with BNT162b2 could cause rich nations to switch to Pfizer's rivals. Poorer countries might totally rule out Pfizer's and BioNTech's coronavirus vaccine altogether.
A freeze-dried fortune
Pfizer could potentially forego a fortune if the ultracold storage requirements for BNT162b2 prove to be a significant competitive disadvantage. A shift of fewer than 100 million doses sold to another rival would add up to over $2 billion in lower sales for Pfizer and BioNTech.
The good news is that Pfizer doesn't plan on letting the storage requirements for its COVID-19 vaccine become a roadblock. The big drugmaker and its German partner are hard at work on a solution to the ultracold-storage issue.
In November, Pfizer chief scientific officer Mikael Dolsten stated in an interview with Business Insider that a lyophilized (freeze-dried) version of BNT162b2 is being developed. This second version of the vaccine would be in powder form. And it wouldn't require freezing at all -- just standard refrigeration.
Dolsten said that the freeze-dried powder version of BNT162b2 could be available sometime in 2021. If he's right, that should be soon enough to keep billions of dollars in sales from slipping out of Pfizer's hands.
The big wild card
Exactly how much money Pfizer will make from BNT162b2 over the long run depends on a wild card that's completely outside the company's control. No one knows for sure at this point how long any of the COVID-19 vaccines will provide protection against infection by the coronavirus.
If the duration of protection lasts for several years, Pfizer will enjoy a huge influx of cash next year, followed by a steep decline in 2022. However, if COVID-19 vaccinations are required annually or more frequently, BNT162b2 -- particularly a freeze-dried version -- will probably generate recurring revenue in the billions of dollars for Pfizer for a long time to come.
In that scenario, this big pharma stock will almost certainly grow much bigger over the next decade.