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May 26, 2023
EU Strikes Deal With Pfizer to Cut Covid Vaccine Purchases
(Bloomberg) -- The European Union reached a deal with Pfizer Inc. and BioNTech SE to scale back purchases of Covid-19 vaccines by about a third after some member states said they were reluctant to pay for new deliveries amid an oversupply of shots after the pandemic started to wane.
The amended supply contract takes into account the improved epidemiological situation, while continuing to ensure access to the latest available version of the vaccine should new variants of concern emerge, the European Commission, the 27-nation EU’s executive arm, announced on Friday.
The new pact also foresees a reduction in the quantity of doses purchased by EU member states under the contract, the commission said. The cut in volume will be about 35%, according to two people familiar with the matter, who spoke on condition of anonymity.
Following payment of a fee, originally contracted doses will be converted into optional orders, while the time in which countries will be able to take delivery of the vaccines has also been extended to four years from now, the commission said.
“The amended agreement reflects the companies’ commitment to working collaboratively to help address ongoing public health needs, while respecting the principles of the original agreement,” Pfizer said in a separate statement.
The deal could amount to a revenue hit of $1.5 billion to $2.1 billion each year for the company, according to Sam Fazeli, a pharma analyst at Bloomberg Intelligence.
“Pfizer-BioNTech’s reduced Covid-19 vaccine deal with the EU could put Pfizer guidance of $13.5 billion in 2023 revenue at risk, while also having negative repercussions for Moderna,” Fazeli wrote.
Of the 900 million initial doses committed to in the previous agreement of 2021, 450 million doses are scheduled to be delivered in 2023. In March, health ministers of Bulgaria, Poland, Lithuania, Hungary issued a joint letter asking the commission to negotiate with Pfizer in particular on non-delivery payments, significantly reducing the number of contracted doses.
Read More: Why Covid’s Aftermath Will Be Felt for a Long Time: QuickTake
As of March this year, the World Health Organization recommends getting vaccinated and staying up to date with booster doses generally as a way of preventing Covid and post-acute conditions. Still, with the end of the Covid emergency, free, government-provided booster shots for all are coming to an end in many places, which could contribute to a drop-off in uptake.
--With assistance from Naomi Kresge.
(Updates with analyst starting in sixth paragraph)
©2023 Bloomberg L.P.
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