What happened
Shares of Moderna (MRNA +0.64%) jumped 8.4% on Friday after rival drugmaker Pfizer (PFE 0.43%) said it intends to drastically increase the price of its COVID-19 vaccine next year.
NASDAQ: MRNA
Key Data Points
So what
Pfizer is seeking to charge as much as $130 per dose, up from the $30.50 per shot it currently receives from the U.S. government. The pharmaceutical giant is currently in talks with health insurers to determine the final price of the drug, according to The Wall Street Journal.
The news gave investors better insight into the potential revenue vaccine makers could generate once the industry transitions from a public-health emergency to a commercial market for COVID-19 drugs. Pfizer's proposed prices were significantly higher than many analysts expected, so several investment firms boosted their sales estimates for both Pfizer and Moderna.
Shares of other vaccine makers also rose on the news. BioNTech, which partnered with Pfizer to develop its COVID-19 vaccine, surged 11.2%. And Novavax, which recently received an Emergency Use Authorization for its vaccine and booster shot for adults, climbed 12.6%.
Now what
The shift to a commercial market is expected to occur early next year when vaccine makers' contracts with the U.S. government conclude, and existing drug stocks are exhausted. Booster shots are projected to be a lucrative source of recurring revenue for Moderna and Pfizer in the coming years.
Moreover, the profits vaccine makers earn from these COVID drugs should help to fund their vast research and development programs. Higher prices for COVID shots would thus mean more capital to invest in their most promising projects.
