Can Pfizer Beat GSK and Moderna in This $10 Billion Market?

Pfizer (PFE 0.55%) and GSK (GSK 0.49%) have competed against each other for years. Moderna (MRNA 1.69%) is a more recent rival, with its COVID-19 vaccine, SpikeVax, going head to head with Pfizer's Comirnaty.

But now all three of these companies are poised to do battle in a new arena with their respective respiratory syncytial virus (RSV) vaccines. Can Pfizer beat GSK and Moderna in this $10 billion market?

A serious unmet need

RSV ranks as one of the top causes of acute respiratory problems. More than 177,000 older adults are put in the hospital each year in the U.S. because of the virus, with an estimated 14,000 annual deaths.

But RSV is an even worse issue for children. Around 33 million cases of RSV occur globally each year in kids under age five. Roughly 3 million of those cases require hospitalization. As many as 120,000 children die per year because of complications linked to RSV infection.

No RSV vaccine has been approved so far. However, there's clearly a serious unmet need -- one that Pfizer, GSK, and Moderna hope to address.

SVB Leerink analyst Geoffrey Porges projected in 2021 that RSV could be a $10 billion annual market by 2030. Porges estimated that roughly 72% of that market will be in immunizing adults, with another 18% from infant prophylaxis and 10% from maternal immunization.

How the three leaders stack up

Bavarian Nordic is testing an experimental RSV vaccine in late-stage clinical studies and expects to report results by mid-2023. Johnson & Johnson was in the race but discontinued the development of its RSV vaccine candidate last month. Pfizer, GSK, and Moderna are the leaders, with all three companies already announcing successful results in immunizing adults age 60 and over.

The U.S. Food and Drug Administration (FDA) established a PDUFA date for next month to make an approval decision on Pfizer's RSV vaccine in older adults. Pfizer's regulatory filing was based on late-stage data showing 85.7% efficacy in preventing severe cases of RSV.

Pfizer is the only company in the group with an RSV vaccine candidate in the regulatory process for maternal immunization of infants. In November 2022, the drugmaker reported an efficacy of 81.8% in preventing severe disease but failed to achieve statistical significance in preventing less severe cases of RSV.

GSK threw in the towel on its maternal immunization program last year due to safety concerns. However, the company announced positive results in October 2022 from a late-stage study evaluating its RSV vaccine in older adults. The vaccine achieved a 94.1% efficacy in severe disease and an overall efficacy of 82.6%. The FDA is scheduled to make an approval decision on the vaccine by May 3, 2023.

Moderna reported late-stage results for its RSV vaccine in older adults in January 2023. The vaccine achieved an efficacy of 83.7%. Moderna expects to file for approval of the vaccine in the second quarter of 2023. 

One piece of the puzzle

Pfizer's main rival in the RSV vaccine market will likely be GSK, assuming both companies win FDA approvals for their respective products. I wouldn't be surprised if GSK grabs a slightly higher market share with its higher efficacy in preventing severe disease. But Pfizer should have the RSV maternal immunization market all to itself.

Investors should keep in mind that the RSV market is only one piece of the puzzle for Pfizer. There are plenty of factors that have made the stock increasingly attractive lately, including a string of regulatory wins. 

Sure, Pfizer faces sales declines in 2023 for its COVID-19 products. It has other top-selling drugs that lose exclusivity over the next few years. However, the company believes that the launches of new products through the first half of 2024 will more than make up for those losses. Pfizer also expects that business development deals will add close to $25 billion in annual revenue by 2030. 

I expect that Pfizer will be a leader in RSV and several other multibillion-dollar markets over the next decade and beyond. And with a dividend yield of nearly 4%, this stock pays you to wait for that success.