CSL and other Big Pharm firms to reap billions of dollars from Covid-19 vaccines

Big Pharma execs, including those at CSL, must be licking their lips when they do the maths. The various Covid-19 vaccines will pour hundreds of billions of dollars into their coffers.

CSL’s profit provided just a tiny pointer to the billions – correction, the tens of billions and over time indeed hundreds of billions - of dollars that are going to flow to Big Pharma thanks to the virus.

The various vaccines collectively add up to the mother of all mother lodes for Big Pharma; they are going to make the money that Big Pharma, including our own CSL, has been pocketing every year from the flu vaccine look like petty cash in comparison.

You can just see those execs licking their lips as they do the maths.

Let’s see; eight billion people on the planet; even if only half get vaccinated, that’s somewhere

between $US16bn ($20bn) – the $US2.15 per dose the EU is paying – and $US156bn ($202bn) – the $US19.50 per dose paid by the US for one of the vaccines.

That’s on the assumption that each person gets two doses; and further, that’s just the cost for this year’s initial jabs. It’s almost certainly going to become an – at least – annual event.

The $US2.15 being paid by the EU for what will be our major version – the AstraZeneca one – is considered super-cheap; the UK and the US are paying in the $US3-4 per dose range and “everyone else” is paying more.

The first vials of CSL’s locally produced AstraZeneca vaccine. Picture: supplied

How much are we paying, minister?

The $US19.50 is for the Pfizer vaccine; other vaccines are costing in the $US14-15 per dose range.

Let’s say the price settles in the $US5-10 range. At two doses per year for four billion people, that would add to a new revenue stream for Big Pharma of somewhere between $US40bn and $80bn every year, pretty much forever.

The demand for the vaccine has been given a huge and completely unprecedented boost by the hysteria that’s been generated over this virus, unlike anything we’ve seen remotely similar

previously with the flu.

Just look at the most recent, exaggeratedly way-over-the-top fear-mongering of Victorian premier Dan Andrews – the virus is “hyper-infectious”; it’s travelling at “light speed”; and it’s devilishly clever to boot.

Indeed, we – and CSL – have just seen this, now almost unceasing year-long frenzy, spill over into a huge surge in the demand for the flu vaccine through 2020.

Even though, in Australia at least, there was precious little chance of you catching the flu last year – through those months of home imprisonment, who were you going to catch it from?

As CSL noted yesterday, there was “significant growth” in seasonal flu vaccines.

Sales out of its vaccine company leapt 40 per cent to $US1.34bn in the six months. Even more impressively, the division’s gross profit leapt 64 per cent to $US933m, as 66c in every sales dollar stayed in CSL’s profit tin.

Even more striking is the profitability of the extra sales. Vaccine sales were up $US399m; gross profit increased by $US369m.

The marginal profitability was a staggering 92c in the extra sales dollar.

That’s the big pointer to how much money Big Pharma is going to make out of the Covid vaccine; as they get volumes whirring along and presumably making the same sort of tweaks year-to-year that they do – at very little cost – to the flu vaccine.

That’s one huge money-making reality beginning with the letter ‘C’. The other one is China and what’s it doing to the profits of ‘Big Iron’ – Rio, BHP and Fortescue.

They’ve now all released their numbers – in Rio’s case for the full 2020 year.

The iron ore revenue of the three added to $US51bn. Gross profit was $US36bn – a staggering 71c in the revenue dollar.

My estimate of their aggregated net profit on iron ore sales is $US22bn ($29bn) – after $US13bn ($17bn) had flowed to Canberra in company tax and to WA in royalties.