Back in May, the World Health Organization declared an end to the global Public Health Emergency for Covid-19. Despite the end of the pandemic, however, the healthcare industry is still feeling its effects. Vaccine makers and pharmacy chains are seeing a steep decline in the number of people getting Covid shots. Also, some makers of at-home rapid Covid tests and companies that make personal protective equipment have gone out of business.
During the height of the pandemic, companies across the healthcare industry raced to reorient themselves. Pharmaceutical companies that were focused on developing drugs for cancer and rare diseases pursued making vaccines and antiviral medications to combat Covid. Also, medical device makers developed at-home testing kits. However, the outlook for many of these companies has deteriorated as demand for their medicines and pandemic products dried up.
Pfizer (PFE), one of the biggest winners of the pandemic boom, has seen its fortunes reverse. Its stock price tumbled to a 3-1/4 year low late last month and is down -35% this year. On Monday, Pfizer cut $9 billion from its annual sales forecast because of declining demand for its Covid shots and its Paxlovid treatment. Shares of Moderna (MRNA) slumped to a 3-year low on Tuesday and are down -49% this year. Moderna said it expects Covid vaccine sales of $6-$8 billion this year and predicts the U.S. market will be 50 million doses for its new vaccine this season. However, Jeffries believes vaccine demand will be much weaker, between 35 million and 40 million doses.
The slow rollout of the new vaccines this year has made it harder to figure out how much demand there really is. Pharmacies have had to turn people away who were looking for the new shots as Moderna and Pfizer have been slow to ramp up production, hurting sales at pharmacies. Walgreens Boots Alliance (WBA) has taken a hit from the slow pace of vaccinations, saying it has administered roughly 400,000 Covid-19 shots this quarter, compared to 2.9 million shots the year prior. CVS Health Corp (CVS) has also faced headwinds and said its pharmacy and consumer wellness business generated $1.4 billion in Q2, down -17% y/y due to lower demand for products and services related to Covid.
Other companies also saw considerable declines in their pandemic-related businesses. In February, Lucira Health, a maker of at-home Covid test kits, filed for Chapter 11 bankruptcy protection. Also, test maker Ellume Ltd collapsed into liquidation in June. The broad decline in pandemic-related businesses has investors shifting their focus away from Covid-19 and into weight-loss drugs that some analysts predict will have broad economic ramifications. For example, shares of Novo Nordisk A/S, the maker of the Ozempic and Wegovy drugs used for weight loss, are up +49% this year.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
