As 2021 comes to a close, the world is readying for another pandemic year. The coronavirus vaccine market is a fight over market share, amid the rise of the still-mysterious omicron variant.
So far, I believe that the best vaccine stocks to own in 2022 will be the same ones as in 2021. The winners are likely to keep winning, and that means there's an opportunity for investors, even if they're showing up late. Let's look at the two vaccine makers that soared the highest this year, and analyze why next year might be more of the same.
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1. Pfizer
It shouldn't be too surprising to see Pfizer (PFE 2.40%) as the best vaccine stock for 2022 and beyond. Its Comirnaty is the world's most widely approved and the most purchased by far, and nothing else even comes close. It held a 74% share of the U.S. market, and 80% of the E.U. market as of October.
In total, management expects as much as $36 billion in revenue from Comirnaty in 2021. In 2022, it predicts around $29 billion, from the planned delivery of 1.7 billion doses. The fact that Pfizer might make less revenue from the vaccine in 2022 than it did this year shouldn't scare investors, though.
The company is developing an antiviral pill for COVID-19 called Paxlovid, and things are moving quickly. On Dec. 14, it confirmed the results of its recent phase 2/3 clinical trial, which showed that adult patients treated with Paxlovid within five days of symptom onset experienced an 88% reduction in their risk of hospitalization or death compared to placebo. Pfizer has already shared the data with the Food and Drug Administration to supplement the Emergency Use Authorization (EUA) it applied for in November.
And the U.S. government has already agreed to buy 10 million courses of the drug for $5.3 billion, to be delivered next year. So even if Comirnaty revenue scales down in 2022, Paxlovid income could just be getting started, and that's just one more reason that Pfizer is the leading COVID-19 treatment stock.
PFE Total Return Level data by YCharts
2. Moderna
Moderna (MRNA -0.58%) is my pick for the second-best vaccine stock in 2022. Moderna expects revenue between $15 billion and $18 billion from its Spikevax in the 2021 fiscal year, with as many as 800 million doses delivered. In 2022, that could reach as much as $22 billion, depending on the enduring strength of demand.
In terms of the number of doses committed in existing supply agreements, Pfizer is No. 1, followed by the Serum Institute of India, according to figures from Unicef. Moderna is No. 3 in the world, making its vaccine significantly more in-demand than those of Johnson & Johnson and AstraZeneca. As its jab continues to hold up in efficacy over time, the company's performance against these two larger competitors continues to improve, though it isn't gaining any ground against Pfizer.
Moderna plans to create a pan-respiratory vaccine that can be administered as an annual booster shot. Though the project's precursor vaccines to prevent illnesses caused by influenza, the cytomegalovirus, coronavirus variants, and respiratory syncytial virus are still in the midst of clinical trials, the payoff could eventually be huge.
In effect, Moderna could one day dominate the market for yearly vaccination against all of the most common viral respiratory diseases. And that would be a multi-billion dollar opportunity, which is exciting for shareholders.
Don't be surprised if 2022 isn't as dynamic as 2021
While both of these companies are profitable and positioned for success in 2022, investors should manage their expectations for how much the stocks will actually grow. There's a very good chance that they'll outperform the market, but it isn't a shoo-in.
The market has likely already priced in most (if not all) of the upside from forthcoming vaccine revenue. That's especially true given that the advance purchase agreements signed this year determine the revenue for 2022.
It's always possible that the coronavirus will produce another variant, creating new demand for the existing vaccines or requiring the development of new products. But it's also possible that the pandemic could be getting under control toward the end of next year. Although I believe there aren't any better vaccine stocks to buy right now, these investments aren't without risks.
