Covid-19 Vaccines Offer Drug Makers Chance at Salvation, Financial and Beyond – The New York Times

For a long time, drug makers have been the most hated industry in America. Companies are blamed for gouging prices on lifesaving drugs and enriching themselves through the opioid crisis, among other sins.

Now, with pharmaceutical companies racing to find vaccines to end the coronavirus pandemic, the industry is hoping to redeem itself in the publics mind.

The primary goal, of course, is to rescue the world from the grips of a vicious virus. But a big fringe benefit is to get public credit and to use an improved image to fend off government efforts to more heavily regulate the industry.

Consider Johnson & Johnson, one of the worlds largest health care companies.

In recent years, its reputation has been battered by accusations that products like its artificial hips and talcum powder have harmed customers. In 2019, an Oklahoma judge ordered the company to pay $572 million for contributing to the opioid epidemic.

This spring, Johnson & Johnson jumped into the hunt for a Covid-19 vaccine; its candidate is now in the final stage of clinical trials. (On Monday, the company said it had temporarily paused the study after a participant became sick with an unexplained illness.)

Regardless of whether the vaccine ever comes to market, the company is looking to create a surge of positive publicity from its work. Its chief executive, Alex Gorsky, went on the Today show this spring and called Johnson & Johnsons lab workers heroes. The company has produced a slick, self-promotional online video series, The Road to a Vaccine, featuring feel-good interviews with the companys scientists and segments on issues like whether it is safe to send children back to school.

Johnson & Johnsons efforts to develop a vaccine will show that J&J is a company full of people with heart and soul who are doing this 24-7, with all their science and know-how, Dr. Paul Stoffels, the companys chief scientific officer, said in an interview. While the companys image at times has been trashed, he said, I hope that we can get to a better reputation.

That is a widely held sentiment across the pharmaceutical industry. Companies are looking for public makeovers as a political battle over drug price controls looms. Others are seizing the once-in-a-generation opportunity to raise money for future projects from investors and the government.

For an industry demonized by consumers and politicians, the hunt for a vaccine offers a path to redemption, said J. Stephen Morrison, a senior vice president at the Center for Strategic and International Studies, a think tank in Washington.

Last fall, a Gallup poll found that drug makers had the worst reputation of any American industry. Americans were twice as likely to rate the industry negatively as positively. Drug companies were even less popular than the federal government.

The pandemic and the high hopes for a fast, safe, effective vaccine appears to be changing that perception, at least for now. This spring, other opinion polls showed that Americans views of the industry were improving.

When Gallup released the results of this years annual survey, conducted in the first half of August, the results confirmed that the pharmaceutical industrys reputation had gotten a bit better. Now, it is second to last, having inched past the U.S. government.

Public opinion matters. The industry is facing a fight in Washington over price controls, which could take a bite out of companies profits in the United States. The latest salvo came last month when President Trump issued an executive order that called for capping the costs of some prescription drugs.

The industrys largest trade group, the Pharmaceutical Research and Manufacturers of America, is fighting back by invoking the industrys effort to fight the coronavirus. It denounced Mr. Trumps executive order as a reckless attack on the very companies working around the clock to beat Covid-19.

Kim Monk, managing director of Capital Alpha Partners, a policy research firm in Washington, said finding a safe and effective vaccine could help drug companies in their campaign to stave off price controls. You dont even need to say it, she said. Its part of the strategy.

To be sure, the race for a coronavirus vaccine is much more than a public relations play. Scientists at pharmaceutical companies take great pride in their work to combat human suffering. And there is immense prestige involved in being among the first to successfully conquer a devastating global pandemic.

There are also potentially enormous profits on the line.

Vaccines are often thought of as the pharmaceutical industrys sleepy, low-profit backwater, but that is not always the case, said Dr. David Bishai, a professor of health economics at Johns Hopkins Universitys school of public health.

Prevnar, a vaccine to prevent pneumococcal disease, which leads to ear and sinus infections, is Pfizers top-selling product, responsible for nearly $6 billion in revenue last year.

Mercks Gardasil, which protects against human papillomavirus, a sexually transmitted disease that can cause cervical cancer, generated close to $4 billion in sales last year, making it the companys third-best seller.

While drug makers generally do not disclose what they earn on individual drugs, two of the worlds largest pharmaceutical companies, GlaxoSmithKline and Sanofi, have said in securities filings that the profit margins in their vaccine divisions are greater than in their other lines of business.

Ronny Gal, an analyst at Bernstein, estimated that sales from a coronavirus vaccine could be up to $20 billion in the first year alone. And since diseases are rarely eradicated, vaccines tend to be a very long-term business, he said.

Two leading drug makers have pledged to not profit from their vaccines. But those promises are laden with caveats.

Johnson & Johnson has said it will sell the vaccine on a not-for-profit basis for emergency pandemic use. But the company hasnt explained in detail how it will define not for profit. In any case, when the emergency pandemic phase of the crisis ends, the company will no longer be bound by its pledge. Jake Sargent, a Johnson & Johnson spokesman, said the end of the emergency phase will be defined at a future date by global health authorities.

Another major drug company, AstraZeneca, has made a similar pledge not to profit on its vaccine, which is also in large clinical trials, during the pandemic. But in a contract with one of its manufacturers, AstraZeneca has suggested that it can declare the pandemic to be over as soon as July 2021 around the time that a successful vaccine is likely to be sold worldwide, according to The Financial Times.

The company has committed to supplying the potential vaccine at no profit during this pandemic period, said an AstraZeneca spokeswoman, Michele Meixell. It is too early to determine pricing post-pandemic.

The Covid-19 vaccine business is likely to be unusually lucrative because much of the risk has been taken out of the equation. The federal government has entered into deals with companies totaling more than $10 billion to develop, manufacture and distribute coronavirus vaccines. Drug companies usually spend small fortunes to market their products. But that will probably not be required to generate public interest in a coronavirus vaccine.

If you get a vaccine and it gets recommended by the C.D.C., you barely need a sales force, said Geoffrey Porges, the director of therapeutics research at the investment bank SVB Leerink.

A successful vaccine could be a transformative moment for unproven companies like Moderna and Novavax, which have never previously brought vaccines to market. But even being involved in the race is proving financially fruitful for smaller firms.

The German biotech firm CureVac, which says it hopes to have a successful vaccine by the end of the year, raised $245 million in August when it began trading on the Nasdaq. It is now valued at nearly $10 billion, despite never having brought a product to market.

Ms. Monk of Capital Alpha Partners said drug makers large and small were likely to benefit from any association with fighting the coronavirus. For an industry that is not viewed favorably by the public, she said, this is a real opportunity for them to put on a white hat and save the world.

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Covid-19 Vaccines Offer Drug Makers Chance at Salvation, Financial and Beyond - The New York Times