- Patented drugmakers, i.e. biotech companies and Big Pharma, are set to be the winners of the game at the expense of generic manufacturers that are unable to cash in on the vaccine windfall. ‘Generic vaccines’ would require too high a financial cost in additional clinical trials and manufacturing expenditures that cheaper prices could not make up for. That’s why generic drugmakers are expected to post only +2% revenue growth in FY 2021, compared to +8% for Big Pharma and +21% for biotech drugmakers. In terms of profitability, the operating margin of generic drugmakers is expected to remain below 10% on a global average in 2021, versus nearly 30% for Big Pharma and a lavish 45% for biotechnological companies. However, the latter two segments will still need to watch out for pressure to lower drug prices and (much) less profitable drug wholesalers also wanting their share of the pie.
- In the long-run, the success of previously unknown biotechnological drugmakers, notably Moderna and BioNtech, could be a game-changer for pharmaceuticals as a whole. Barring any unexpected side effects in the long run, the Covid-19 vaccines created using mRNA technology could be the disruption needed in other therapeutic fields, including oncology, a five times bigger market than vaccines. In the future we might see (currently small) biotechnological companies swallowing the world’s largest drugmakers eventually, instead of the other way around. Unlike Big Pharma however, biotech companies often lack knowledge in running drug manufacturing plants. Moreover, there is a huge difference in size: the world’s 13 largest drugmakers – i.e. Big Pharma - account for about USD500bn of total revenues compared to near USD100bn for the 15 largest biotech companies. Partnerships between the two are hence the usual way biotech startups break into the pharmaceutical market, as seen in the collaboration between Pfizer and BioNtech.