Covid vaccines may become a viable business, but that's not good news

 Vaccines are not consumer products made by the pharmaceutical industry: they are infrastructure.

For most of us, the growing evidence that the efficacy of Covid vaccines is declining over time should be a cause of worry. For the drug companies that have spent billions of dollars developing them, it’s a once-in-a-lifetime opportunity.

Recent studies on vaccine effectiveness have led to a run of orders for boosters in recent weeks. The U.S. will start distributing extra shots beginning Sept. 20th, and expects to roll out about 100 million doses in the coming months. Shortening the window before a third dose from eight to as little as five months was being discussed, President Joe Biden said last week. The U.K. last week ordered 35 million more doses of the Pfizer Inc. vaccine to supplement earlier shots. In Israel, anyone over 30 is already eligible for a booster.

That’s quite a shift from the traditional vaccine business model. Despite being distributed to, in many cases, almost every person on the planet, inoculations have traditionally been an unprofitable backwater for the pharmaceutical industry.

Treatments that take years and billions of dollars to develop are bought in vast volumes by governments with a keen eye on price and are often effective for life after a single dose. That model of extraordinarily high start-up costs, thin margins, and minimal repeat business don’t represent an attractive way for companies to allocate capital. For decades, there have been concerns that the R&D pipeline for new vaccines is drying up. If it weren’t for the regular recruitment of new customers when children are born and start their usual round of shots, this part of the industry would be even more moribund than it already is.

The rush of orders for booster shots represents a break with that model. Traumatized by the biggest pandemic in a century, rich countries are preparing to pay handsomely year after year to stay protected. With chances that most of the world’s 7.7 billion population will eventually receive annual shots of a drug that retails for between $2 and $20, the Covid industry is already likely to be vastly larger than the $6.5 billion-a-year influenza business. Just look at the array of companies that lined up to push their drugs through clinical trials--a stunning contrast in an industry that had settled into a cozy oligopoly between GlaxoSmithKline Plc, Sanofi, Merck & Co. and Pfizer, after rivals pulled back to more profitable lines of work.