$PFE Comirnaty’s dominant market teaches us the importance of being first-to-market with strong execution

Pfizer’s 4Q21 earnings had a very interesting slide that showed the importance of being first-to-market – this shows why it is so important to be either FIRST-IN-CLASS OR BEST IN CLASS IN PHARMACEUTICAL PRODUCT.

Pfizer’s covid19 vaccine has currently massive 70% of market share in the covid19 vaccine market. As shown in above chart, the blue portion of the Pfizer’s market share and the gray portion is non-Pfizer vaccines – you can see that BLUE PORTION IS GETTING BIGGER AT A MUCH FASTER RATE THAN GRAY – WHICH INDICATES THAT PFIZER IS LEADING AND GAINING MARKET SHARE – SOLIDIFYING ITS LEADERSHIP

PFIZER GAINED MARKET SHARE DESPITE COMPETITIVE LAUNCHES FROM ASTRAZENECA, JOHNSON AND JOHNSON, OR MODERNA-EMERGING AND SOLIDIFYING ITS POSITION AS THE LEADER IN COVID19 VACCINE.

Now, Pfizer is building out covid19 vaccine franchise with Paxlovid – I would expect them to replicate their success as they have done with covid19 vaccine.

While one may think that it is just covid specific, it is actually relevant for ANY BIOTECH PRODUCT SEGMENT OR THERAPEUTIC AREA

Key reasons are as follows:

FIRST: FIRST IN CLASS PRODUCTS WILL HAVE SIGNIFICANT LEAD IN TERMS OF PHYSICIANS HAVING EXPERIENCE WITH THE PRODUCT

Physicians know what to expect and how to handle any side effects – they simply feel more comfortable.

SECOND: FIRST IN CLASS PRODUCTS WILL ALWAYS HAVE MORE EFFICACY / SAFETY DATA THAN SUBSEQUENT COMPETITORS

Clinical data continue to accumulate with each use of pharmaceutical product. This informs future physicians, but also becomes strong legal defense in case of unfortunate events (Product A is the most widely used product for this disease – physician used the product because it is the most widely used product)

THIRD: COMPANY BECOMES PRICE-SETTER FOR THE CLASS VS. PRICE-TAKER

with strong competitive advantages that are intrinsic to the first-in-class products, first-in-class products generate significantly greater demand – this gives pricing power for the first-in-class products. This is highly important – volume growth is important, but pricing power is important for margin. Without differentiation, your product is commodity – with clear differentiation, your product is golden.

Future of Pfizer?

Future of Pfizer five to ten years from now will be driven by how effectively the company decides to deploy capital – what many investors call “Covid cash”. They have an aspirational goal –

PFIZER IS TARGETING $25BN OF INCREMENTAL 2023 RISK-ADJUSTED REVENUE FROM BUSINESS DEVELOPMENT ACTIVITY (M&A or licensing deals).

With significant patent expiries coming up in the back half of 2020s, how Pfizer spends the cash will determine whether Pfizer continues to trade on low multiples relative to its peers or re-rates to an innovative biopharma company that will grow through large patent clffs.

*not investment advice