NEW YORK (BLOOMBERG) - After racing to build capacity and meet once seemingly insatiable orders for Covid-19 shots, the global vaccine industry is facing waning demand as many late-to-market producers fight over a slowing market.
The trend is poised to rein in the blockbuster sales that global pharmaceutical giants from Pfizer to AstraZeneca saw at the peak of the pandemic.
It also stands to create new problems for local manufacturers from India to Indonesia that built mammoth capacity to make shots but are now grappling with excess supply.
Even as boosters are likely to keep demand alive for Covid-19 inoculations worldwide, the desperate shortages that existed for much of last year have waned.
Instead, in a dramatic reversal, the possibility of a global glut is now looking more likely.
Across the world more than 11 billion doses have been administered, with uptake increasingly coming from poorer countries with low rates of coverage.
But after grappling with severe shortages last year, Covax, the World Health Organisation-backed sharing initiative supplying low-to-middle-income countries, said in January that stocks are exceeding demand.
Distribution, absorption capacity and hesitancy are now the main challenges to getting shots into arms in places such as Africa.
Shares in companies that have made their names during the pandemic have likewise plunged as movement and travel restrictions ease across many parts of the world.
Projections that Covid-19 vaccine revenue for Pfizer, Moderna, AstraZeneca and Johnson & Johnson may top US$61 billion (S$83 billion) this year, slightly above 2021 sales, might be "over-optimistic," according to a Bloomberg Intelligence report this month, citing lack of enthusiasm for fourth doses in Israel as an early indicator of diminishing global demand.
"Supply is exceeding demand in much of the world, even with many countries rolling out booster shots," said Mr Scott Rosenstein, a New York-based special health-care adviser to Eurasia Group, who expects production to taper off this year and next unless there is a real variant "curve ball".
"Once the perception set in that Omicron is less likely to lead to severe illness, and the vaccines don't do a great job at preventing infection while still providing strong protection against severe illness, demand for Covid-19 vaccines has tailed off considerably," Mr Rosenstein said.
The number of shots needed in the coming years is expected to decline from the early days of the pandemic. Meanwhile, a growing number of manufacturers are breaking into the market.
More than 9 billion doses could be produced in 2022, but vaccine demand may decline to a rate of about 2.2 billion to 4.4 billion doses per year in 2023 and beyond, with a clearer picture emerging over time, according to analytics firm Airfinity.
Sales of AstraZeneca's Vaxzevria inoculation are set to fall in 2022 after hitting about US$4 billion last year, the company has said.
Pfizer had vaccine sales of US$36.8 billion last year, and in February said it expected sales of US$32 billion in 2022. That's based on contracts signed as of late January, and analysts expect the orders to go up during the year.
Both Moderna and Pfizer have asked US regulators to clear fourth-shot boosters.
Moderna's chief executive said on a conference call that the US government has yet to put in orders for 2022, suggesting room for growth if the country buys a large amount of boosters.
AstraZeneca declined to comment. Pfizer didn't directly address questions about vaccine demand, saying in a statement that there's enough capacity to vaccinate the world in 2022, yet barriers to access remain.
Moderna didn't provide additional comment.
Yet more supply could be coming online soon. The problem is particularly acute in India, home to the world's largest vaccine industry, which is grappling with domestic and global oversupply.
Some experts in India have questioned the need for boosters, doubting their effectiveness at preventing infections beyond a few weeks.
Biological E., a large manufacturer based in the southern city of Hyderabad, invested about 15 billion rupees ((S$270 million) to double capacity during the pandemic to about 4 million vaccine doses a day.
Corbevax, its protein sub-unit Covid shot, was first granted local emergency approval for adults in December and then 12- to 18-year-olds last month.
Yet, with most adults fully inoculated and the government showing no urgency to expand its booster drive, it's uncertain how many more Corbevax doses will be purchased beyond the 300 million New Delhi has guaranteed to take off the firm's hands.
The real challenge is going to be utilising the increased capacity, managing director Mahima Datla said in an interview in Hyderabad.
"Fixed costs have to go somewhere, right? You're not going to be able to send people home, shut off half your plant."
Biological E. isn't the only Indian manufacturer facing that truth. Zydus Lifesciences' DNA Covid-19 vaccine was approved late last year, but India's government has only ordered 10 million doses,
Managing director Sharvil Patel said on an earnings call last month, conceding there was "uncertainty" on further opportunities.
The Serum Institute of India, the country's main supplier that produced 2 billion Covid shots last year, halted manufacturing in December after a lack of orders, Chief Executive Officer Adar Poonawalla told a panel in January. Serum, a mammoth supplier of a variety of vaccines to the developing worlds, didn't respond to questions and requests for comment on the company's production levels of Covid inoculations.
"One of the big questions moving forward will be what to do with all of this vaccine manufacturing capacity as demand dwindles," said Mr Rosenstein.
"There probably isn't sufficient demand for other vaccines for this to be a viable option for all of these manufacturing plants."
Privately held Biological E., which was founded by Ms Datla's grandparents in 1953 and supplies the likes of Unicef with childhood inoculations, may re-purpose lines built for coronavirus shots, Ms Datla said.
She said her company hopes to supply Covax, which will need to replenish stocks that are expiring.
However, Biological E. will first need to obtain WHO approval to make those shipments and efficacy data for the vaccine has yet to be published.
Ms Datla didn't give a timeline for the study's release.
Other Indian vaccine suppliers are also looking at innovative immunisation opportunities beyond Covid.
"We believe that not just Covid-19 vaccines, but flu shots, pneumococcal vaccines, vaccines for other neglected diseases will all start becoming very important opportunities," chairman Kiran Mazumdar Shaw of Biocon, which inked an annual 100-million-dose access deal with Serum last year, told Bloomberg Television earlier this month.
Meanwhile, in other parts of the world, some developers are throwing in the towel. Indonesia's Kalbe Farma halted work on a Covid shot with South Korea's Genexine this month, citing abundant stocks. It now aims to use the DNA technology for other types of vaccines.
Despite the current pressures, companies will likely keep seeing demand for boosters while they pursue improved inoculations that are superior to the initial products.
It appears Covid-19 is evolving to what will likely be an endemic disease, meaning it's likely here to stay, said Mr Gary Dubin, president of the vaccines unit at Japan's Takeda Pharmaceutical.
Still, questions remain about whether regular boosters will be needed and how often, and potential variants "could rapidly change the picture," he said.