On Tuesday, investors hope to learn Pfizer Inc’s plans for what could be a once in a generation cash infusion from COVID-19 treatments and vaccines in 2022.
Some drugmakers are looking to spend on potential acquisitions.
According to Chief Executive Albert Bourla, Pfizer’s 2021 revenues could top $80 billion – its highest ever annual figure. In 2022, analysts expect its revenues to be more than $100 billion following an increase in uptake of Pfizer’s oral antiviral treatment Paxlovid.
In a statement Pfizer said, it books profit in the high 20s percent of vaccine revenue.
Paxlovid has been authorized in Europe, Canada, and in the UK.
On average, analysts have forecast its sales to reach $23 billion this year. The U.S. purchase contract alone, for just one sixth of Pfizer’s expected 2022 production of 120 million Paxlovid courses, topped $10 billion.
Profits from the drug are expected to be high.
“What are they actually going to do with all this cash?” asked Mizuho analyst Vamil Divan, which adding Pfizer may need to bring in new experimental drugs to replace sales from those losing patent protection in the next few years.
“Is future growth coming from the vaccine and Paxlovid, or are they buying things to boost their pipeline? I think we want to see them do more things like that to build their pipeline,” opined Divan.
Pfizer’s profit surge comes at an opportune time for deals.
“There was very little M&A in biotech last year and that’s one of the things that held the sector back. Biotech investors expect and are hoping that it picks up this year, and we think Pfizer is going to be a major driver of M&A,” opined healthcare investor Brad Loncar.
In 2021, Pfizer bought Arena Pharmaceuticals Inc for $6.7 billion in cash and cancer drug developer Trillium Therapeutics for $2.3 billion.
It is also possible that Pfizer may take steps to reward shareholders.
“They’ve had such a flood of money come in that there might be a component of buybacks or dividend to Pfizer’s capital deployment, but the main event will be M&A,” said Loncar.
Pfizer’s dividend yield of roughly 3% compares favorably to the nearly 2% dividend yield for the Dow Jones industrial average index.
In the last 12 months, Pfizer’s shares have risen more than 50% in the past outperforming the 17% gain for the S&P 500 index in the same time period.
Prior to the pandemic, Pfizer’s shares traded in a range below $44 for several years.