Pharmaceutical giant Pfizer (PFE -0.12%) is the preeminent leader of the COVID healthcare market. After booming vaccine sales last year, the oral antiviral has taken over some of the spotlight to become the fastest-selling drug within the US. Pfizer is now looking to expand Paxlovid's dominance to international markets, but may encounter some competition in one potentially large market.

Widespread uptake within the U.S.

Since the beginning of the year, Paxlovid has taken off within the US and appears to have shaken off the news that symptoms may rebound after completing the course of the drug. So far, the drug is resistant to emerging strains, protecting against even the newest Omicron strains. This has allowed Paxlovid to grab 90% of the U.S. market share, and the antiviral is now prescribed to about 40% of people who get COVID. 

Remarkably, these numbers may even increase as patients gain more direct access to the treatment. At the beginning of July, the Food & Drug Administration authorized state-licensed pharmacists to prescribe Paxlovid, meaning that a patient no longer needs to visit a doctor for a prescription. This removes some of the barriers of cost and time that might prevent infected people from seeking treatment, and is likely to drive further domestic sales for the rest of the year. 

The uptick in COVID cases this summer has caused Paxlovid sales to soar, rising from $1.5 in the first quarter to $8.8 billion in the second quarter. And domestic usage continues to climb, reaching new records in July. Paxlovid looks to be easily on track to meet Pfizer's estimated $22 billion sales for the year. 

Slower uptake outside of the U.S.

Although the treatment has been authorized since the beginning of the year in many countries, its reception outside of the U.S. has been more restrained. In the second quarter, international sales accounted for a little under half of the drug's total sales. While significant, this is nowhere close to the widespread adoption of Pfizer's COVID vaccine, which posts roughly four-fifths of its sales from the international market. The company is optimistic that Paxlovid usage will increase, reporting that international sales in developed countries have more than doubled over the three weeks spanning the end of June and beginning of July. Since Paxlovid sales are already on target, strong international uptake would just sweeten the deal. 

Pfizer is also making its medicine available to underdeveloped countries. In July, the company signed a deal with the Africa Centres for Disease Control and Prevention (Africa CDC) to deliver the pills to African nations. This will help the drug reach those in need of treatment, but will not generate additional profit, since the company is providing the treatment at low cost.

Foreign competition

Paxlovid also now has its first competitor in the Chinese market. The country's health regulator just approved Chinese company Genuine Biotech's drug, Azvudine, for COVID treatment. Azvudine was initially developed and approved as an HIV treatment, but the company found that the pill improves COVID-19 symptoms within seven days for 40% of people taking the medication, compared to only 10% of unmedicated patients seeing an improvement.

Azvudine has not been compared head-to-head against other available treatments, so it is difficult to say which is best at alleviating symptoms. However, the most important measure is the ability of the treatment to prevent severe illness, and unfortunately, Genuine Biotech did not publicly release data to show that its drug reduces the risk of hospitalizations or death. In clinical trials last fall, Pfizer found Paxlovid to be 89% effective, while Merck found molnupiravir to be 50% effective on these metrics.

Given China's zero-tolerance policy aimed to prevent disease spread, the country probably hasn't been a major user of Pfizer's antiviral. Still, the availability of Azvudine on the Chinese market could chip away at Paxlovid's sales within the country.

Lackluster sales outside of the COVID space

COVID-related medicines have driven Pfizer's spectacular growth in the past two years. Second-quarter operating revenue grew 53% year over year. The company has amassed a pile of cash on its balance sheet, just waiting to be used for pipeline development and business deals.  

Yet there are some reasons to be cautious. COVID-related sales are unpredictable. Pfizer said it plans to produce 120 million courses of Paxlovid in 2022, but some analysts expect demand to taper, leading to a global oversupply of the treatment. Excluding COVID-related sales of Paxlovid and the COVID-19 vaccine Comirnaty, the company's year-over-year growth was a sluggish 1%. Despite having one of the lowest valuations in the pharmaceutical industry, the company will need stronger growth to support its current stock price. Keep an eye on its late-stage pipeline to ensure that it can pick up the slack if COVID-related sales falter.