Moderna (MRNA 1.33%) generated billions of dollars in revenue and profit from its coronavirus vaccine over the past couple of years. The company leads the market along with rival Pfizer. But investors have worried about future revenue because right now, the coronavirus vaccine and booster are Moderna's only commercialized products.
The good news is that there's a big new market on the horizon. It won't bring in as much revenue all at once. But over time, it should be the source of recurrent blockbuster revenue. Moderna is ready to tackle this market this year -- and revenue should climb once it does. Let's find out more about this innovative biotech's next major opportunity.
Following the influenza market
That opportunity is the post-pandemic vaccine market. The idea is that part of the population will choose to go for annual coronavirus boosters -- just as they'd go for flu shots. In fact, Moderna compares the post-pandemic coronavirus vaccine market to that of the flu vaccine.
Today, about half of the U.S. population gets an annual flu shot. Worldwide, Moderna has predicted the market could be worth $12 billion to $24 billion -- depending on vaccine price -- if the coronavirus vaccine follows the path of the flu vaccine.
Recently, Moderna gave us a clue about the U.S. coronavirus vaccine market size this year, and the opportunity for growth. Moderna expects about 30% of the U.S. population to go for a coronavirus vaccine or booster this year, as shown in the chart below:
Image source: Moderna earnings presentation.
Initially that comes in lower than the flu vaccination rate, also shown in the chart. But that's logical at this point in time. Some people have recently completed a primary COVID vaccine series -- or received a booster late this season. It will take some time to transition to getting a coronavirus vaccine once a year in the fall. The bright side of this is that it implies Moderna's post-pandemic revenue should grow from here.
Yes, Moderna's vaccine revenue this year is set to be significantly lower than that of earlier pandemic days. But it's important to remember the entire market is changing. Vaccine makers will begin selling doses to healthcare providers instead of directly to governments, so these companies will face lower demand. They plan to increase vaccine prices, though -- and that may compensate for some of that lost demand. Moderna has said it may lift its vaccine price from about $25 to as much as $130.
NASDAQ: MRNA
Key Data Points
A new starting point
This evolving environment means it's very difficult to compare this year's vaccine sales to sales made during earlier days of the pandemic. That's why it's a good idea to look at this year -- and the post-pandemic market -- as a new starting point. From that angle, there are opportunities for growth ahead and recurrent revenue.
Now let's look at near-term revenue potential. Moderna already has predicted $5 billion this year from government contracts signed so far. But let's imagine we're dealing only with a private market, which involves drugmakers selling directly to healthcare providers or pharmacies. In that case, if Moderna charges $100 a dose and takes even 30% of the U.S. market, it could generate $3 billion in sales. And that's just in the U.S.
Of course, as Moderna points out in the chart above, its predicted results could vary according to how the virus evolves, what recommendations are made by regulators, and how many people actually decide to get a vaccine or booster.
It's clear that the enormous demand we saw at the start of the pandemic won't last forever. That was a unique situation. But there's reason to be optimistic about Moderna's position in this new market. The company is likely to maintain leadership along with Pfizer. And if the vaccine market truly follows that of the flu, both companies -- and their investors -- could benefit.
So, from this perspective, growth lies ahead for Moderna. And that makes it a solid long-term stock.
