The near-term earnings outlook for the pharmaceutical industry was revised downward by a major credit ratings agency, thanks to expiring patents on several best-selling medicines and slower sales of Covid-19 vaccines and therapies.
Earnings are forecast to grow anywhere from 2% to 4% between now and the end of 2023, versus an earlier projection of 4% to 6% made last December by Moody’s Investor Service. Even so, the underlying growth reflects ongoing demand, limited exposure to macroeconomic problems, and a resilient supply chain. The outlook, by the way, reflects earnings before interest, taxes, amortization, and depreciation.
In explaining its forecast, Moody’s noted several Covid-19 products are currently generating substantial profits. Over four recent fiscal quarters, the Pfizer vaccine generated global revenue of over $46 billion and its Paxlovid antiviral pill yielded $1.5 billion, while a Merck antiviral pill generated $4.2 billion. But sales for are expected to peak this year and then decline by 50% next year.
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