With Pfizer (PFE -0.12%) raking in $13 billion in sales of its coronavirus vaccine called Comirnaty in the third quarter alone, it's entirely understandable for investors to be skittish about the rapidly evolving threat posed by the new omicron variant. If omicron is as dastardly as early reports suggest, it may well pose a major challenge to vaccinated people and vaccine makers everywhere.
But fear of Pfizer's demise in the face of omicron is quite premature. In fact, there's probably no company better positioned to address a challenge like a new variant as an opportunity to rise to the occasion. Let's examine why Pfizer shareholders shouldn't be too concerned about the impact of omicron on their investment.
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Efficacy could still hold strong where it counts
There are a couple of different dimensions of a vaccine's performance. Most important is its ability to prevent severe disease, hospitalization, and death from a COVID-19 infection. So far, Pfizer's jab has performed effectively at this objective although against the delta variant it saw a drop in protectiveness to around 90%.
Regardless of the Pfizer vaccine's effectiveness against omicron, the world is likely going to keep buying doses to keep fighting the other variants. And if the jab's efficacy against earlier variants is anything to go by, it'll still be much better than nothing when it comes to omicron -- even if it turns out not to be as potent as one might prefer. BioNTech's CEO Uğur Şahin went as far as to tell Reuters, "It's likely that [vaccinated] people will have substantial protection against severe disease caused by omicron."
Of course, an abundance of testing needs to be done on the new variant and how well the current vaccines will hold up. But Pfizer is already throwing together an omicron-specific booster shot which could be highly effective, and management expects it could be ready within 100 days. If it is approved, that could help the stock rally as rollout begins.
Its antiviral pill is in the works
Pfizer isn't only working on vaccines to head off the coronavirus. Its antiviral pill candidate is currently under review by regulators and could be ready to go relatively soon. So far, with the current variants, it appears to perform more effectively than a competing product from Merck, which only reduces the risk of severe outcomes by 48% compared to Pfizer's 89%.
Pfizer CEO Albert Bourla believes the antiviral should also be effective against the omicron variant. And even if another variant comes around -- and another one probably will -- Bourla says Pfizer will likely not need to change the formulation of its antiviral to retain its efficacy.
Assuming the antiviral is approved, the company's stock could easily see a boost from the expectation of future revenue in the quarters that follow. The U.S. government has already agreed to purchase $5.29 billion worth of the pill if it's approved early next year.
It isn't a buying opportunity for everyone
Though omicron doesn't pose much of a long-term threat to Pfizer's ability to generate revenue from medicines to combat the coronavirus, I would advise caution to investors at the moment. Because so much attention is currently focused on Pfizer and other vaccine stocks like Moderna -- and how well their jabs might perform against omicron -- there is a high risk of investor overreaction in either direction.
On the other hand, investors who are willing to bet that Pfizer will be able to develop a new and omicron-specific booster should probably consider buying the stock right now. While prior efforts against the delta variant were not in time to prevent its spread, the added concerns surrounding omicron make the stakes a bit higher this time around. And that means people who do invest now could capture a significant return -- assuming things go according to plan.
