This year will undoubtedly be a strong one for Pfizer (PFE 0.55%). The COVID-19 vaccine maker is going to get a huge boost in sales this year, which management expects to come in the neighborhood of $100 billion. More than half of that will come from sales of its COVID-19 vaccine (Comirnaty) and pill (Paxlovid), which together will contribute approximately $54 billion.
Despite the implied 23% revenue growth, the stock's performance has been underwhelming. Shares of Pfizer are down 9% year-to-date, which is only slightly better than the S&P 500's slide of 13% during that time. Investors may not be convinced about how well the healthcare company will do in 2023.
But there's an encouraging development that could potentially mean COVID-19 revenue stays strong beyond just this year. Let's take a closer look.
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Could Paxlovid treat long COVID?
While COVID-19 vaccines are effective in preventing death from the disease, people can still contract the disease even after being vaccinated. And the long-term health effects from COVID-19 are a growing area of concern for health officials. Known as "long COVID," people can feel a variety of symptoms after their initial bout with the disease. This can include a wide range of effects, including tiredness, headaches, sleep problems, stomach pain, changes in menstrual cycles, muscle pain, and many other symptoms.
One option for potentially treating long COVID is Paxlovid. While the pill is designed to reduce the risk of hospitalization or death due to the disease, there have been anecdotal reports that it might provide relief to people who are experiencing long COVID. In one case, a researcher herself took the medication and said it eased her symptoms, which included chronic fatigue.
The problem is that there isn't a large, ongoing study to test the effectiveness of Paxlovid against long COVID. Anecdotal reports of effectiveness are encouraging, but it's hard data from clinical trials that will ultimately get Paxlovid green-lit for treating long COVID patients. However, this initial report could still help move the needle forward toward a large trial.
Dr. Steven Deeks, who has been involved in HIV research for decades and who is a professor at the University of California, told Reuters he believes that "this provides really strong evidence that we need to be studying antiviral therapy in this context as soon as possible."
There could be a massive market for long COVID treatment
Reports suggest that one-in-five adults experience a condition that potentially could be related to an earlier COVID-19 infection. That ratio is even higher among people who are 65 years and older, with one-in-four seniors experiencing those same long COVID symptoms.
Given that there have been more than 530 million cases of COVID-19 worldwide at this point, it's easy to see how big the market may be. One-fifth of that would put the number of potential patients in need of long COVID relief at 106 million. While you could discount approximately 10 million of those cases as potentially being reinfections (based on the current reinfection rate of about one-in-10), that's still a fairly large market of roughly 95 million people.
Paxlovid may not end up being the treatment to help people with long COVID. But with Pfizer already having multiple products that effectively prevent serious illnesses from the disease, it's likely to be a frontrunner for developing a treatment for long COVID as well. And that's why discounting the stock and assuming that its revenue will drop off sharply after this year could be a costly mistake for investors to make.
Pfizer could be an underrated buy right now
COVID-19 revenue could continue to roll in for Pfizer beyond 2022. In the U.S., 67% of people are fully vaccinated, and rates in poorer parts of the world are much lower. Plus, there's still the need for booster shots, especially if new variants of concern come up.
Among these various possibilities, 2023 could still be another strong year for Pfizer. The company is also using its cash to expand its business through mergers and acquisitions. That should help Pfizer be less dependent on COVID revenue down the road, making it an even better, long-term buy. What's more, the shares currently trade at just 12 times earnings.
