Skip to content

Vaccine sales driven down by pandemic’s effects on doctor visits

This week, the world’s four largest vaccine makers each reported hits to their vaccine businesses from the coronavirus pandemic, as public health measures kept people away from their doctor’s offices.

Second quarter sales of Pfizer’s Prevnar 13 pneumococcal vaccine fell 5% compared to last year, while Merck & Co. saw a 26% decline for its Gardasil HPV vaccine.

French pharma Sanofi recorded a 7% overall decline in vaccine sales, in spite of its polio and influenza products sporting double-digit growth. The impact was more universal for U.K.-based GlaxoSmithKline, which had lower sales in every part of its vaccines division. So-called established vaccines dropped 34%, while Shingrix — a shingles vaccine that’s become a key source of revenue for the company — experienced an unprecedented 16% dip.

Declining vaccine sales were to be expected. Earlier in the pandemic, companies warned that shelter-in-place orders and the fears of contracting the virus from doctors’ offices were likely to result in lower vaccine demand for a portion — if not all — of 2020.

Now, however, the big vaccine makers are cautiously optimistic that they’re past the brunt of the pandemic. Sanofi executives said they expect record flu vaccine sales in the Northern Hemisphere this fall, whereas GSK said pediatric vaccinations rebounded considerably in recent weeks.

“We expect to see vaccination rates recover in the second half of the year,” Emma Walmsley, CEO of GlaxoSmithKline, said on an earnings call Wednesday.

“We’re confident it will come,” Walmsley added, “but clearly, there remains a degree of risk on the exact timing.”

A considerable amount of risk comes from uncertainties surrounding the largest pharmaceutical market, the U.S., which has struggled more than any other developed nation to check the coronavirus. As of July 30, the virus had infected at least 4.4 million people in the country and killed more than 150,000, according to the Centers for Disease Control and Prevention.

“There’s a clear difference when you look at the U.S. and Europe,” Luke Meils, GSK’s head of pharmaceuticals, said on the earnings call, noting how most of GSK’s European vaccine business is in pediatrics.

He explained that, in the states, pediatric vaccinations across the industry dropped about 50% over a four-week period from March to April. But by early May, they were quickly rising, as were wellness visits to doctors. Meanwhile, adult vaccinations in the U.S. faced a similar drop but have been “slower to recover.”

For Merck, Gardasil sales in the U.S. fell by nearly two-thirds, a significant drop that executives attributed to reduced access to providers.

Sanofi’s earnings report reflects a similar challenge in the U.S., where the company’s vaccines brought in 41% lower sales than in the second quarter of 2019. The sales hit was less severe in Europe, at 22%. Sanofi vaccine sales in the rest of the world were up 20%, helping offset the declines elsewhere.

Though the second quarter was tough, Sanofi predicts its flu vaccines will have strong performances in the third and fourth quarter. The company’s off to a good start, according to head of vaccines Thomas Triomphe, who said Wednesday that its first shipments of U.S. flu vaccines have gone out. Sanofi estimates it will deliver around 80 million doses to the U.S., “based on the strength of preseason orders.”

“The story is really all about readiness for a record flu season,” Sanofi CEO Paul Hudson said on the company’s earnings call. “Looking ahead, we are planning for a new record flu vaccine sales in the Northern Hemisphere.”

A bad flu season could be disastrous for public health systems already strained by the coronavirus, making vaccinations particularly critical. Depending on the flu strain that’s prevalent each year, however, the effectiveness of flu vaccines can vary.

Medicaid managed care rates on state chopping blocks; Centene, Molina at risk

As states weather the economic hits from the coronavirus pandemic, some are setting their sights on Medicaid, in particular the rates paid to private managed care providers.

California, Michigan and Ohio are among those with plans to cut rates to these payers, and more are likely to weigh that possibility, particularly as big Medicaid players like Centene and Molina post large profits as members delay care. 

Ohio cut its Medicaid funding by $220 million, according to the Ohio Capital Journal, largely cuts that private payers will bear. SVB Leerink analysts expect Molina and Centene to be hit the hardest of the MCOs in the states that have announced the cuts, including Ohio.

These rate cuts were heavily discussed on earnings calls this week as analysts peppered executives with questions about the potential headwind. Centene executives declined to quantify how reductions may impact financial performance or guidance, while rival Molina detailed the financial impact so far.

“We’re currently in active discussions with the states and the starting point is rarely the ending result,” Jeff Schwaneke, Centene CFO, told investors Tuesday during the company’s second quarter earnings call. “It really isn’t constructive for us to publicly discuss our individual state expectations. We continue to believe that we’re on a path in many states toward finding actuarially sound solutions toward the budgetary strain.”

Centene reported net earnings of $1.2 billion for the second quarter, more than double its profit from the prior-year period.

“That lack of transparency is understandably frustrating for investors as they contemplate potential cuts from states tightening budgets. It also begs the question, is guidance at risk?” Jefferies analysts commented in a recent note after Centene reported its second quarter results.

Centene CEO Michael Neidorff attempted to assuage investors’ concerns by detailing the discussions with states as they contemplate cuts. Essentially, Neidorff said Centene is encouraging states to take a longer view of the public health crisis, not just making decisions based on a single quarter.

Neidorff seemed to be trying to dispel the narrative that insurers are gaining from the pandemic as they take in per-member-per-month payments, but pay fewer claims as care is prolonged either voluntarily or as a result of stay-at-home mandates.

Centene’s Medicaid segment is its largest with 12.5 million members spread across 24 states, including Ohio and California. 

“The states’ issue, when they saw the reduced utilization, [was] ‘Oh, you’re saving all this money’,” Neidorff said during Tuesday’s call.

Neidorff maintained that utilization will come back in the second half of the year. And even though utilization may be down, it’s being offset by COVID-19 costs. Centene has spent $550 million on COVID-19 related claims through the end of June.

Rival Molina also has benefited from the pandemic due to lower utilization and reported its second quarter profit increased more than 40% to $276 million.


COVID-19 caused hospital ED visits to dive more than 40%

  • Hospital emergency department visits dropped precipitously during the first weeks of the onset of the COVID-19 pandemic in the United States. Visit rates fell between 41.5% and 63.5% across the hospitals studied, according to research published Monday in JAMA Internal Medicine.
  • Meanwhile, hospital admission rates from the ED rose as much as nearly 150% at one facility, according to the study of emergency visit rates and admissions data from five large healthcare systems in five states — Colorado, Connecticut, Massachusetts, New York and North Carolina.
  • A JAMA editor suggested those who regularly use the hospital ED as a medical safety net are likely staying away for now. As a result, the changes in ED use caused by the pandemic are “likely to further exacerbate racial/ethnic and socioeconomic level health disparities in the U.S. They also make more apparent the need for universal health insurance coverage.”

While media coverage of the pandemic has focused on overwhelmed hospital workers on the front lines, less attention has been paid to some hospital emergency departments seeing far fewer patients as many avoid the risk of exposure to the novel coronavirus.

Earlier research has shown emergency visits lagged behind recovery of other types as hospitals recapture volume put off when elective procedures were halted in the first weeks of COVID-19 outbreaks in the U.S.

For the new study, researchers with the Mayo Clinic, Yale University, Yale New Haven Health System and several other institutions pored over ED and hospital admission records from 24 hospitals within five major hospital systems throughout the country. Those systems, which included major providers such as Mount Sinai Health in New York, Baystate Health in Massachusetts and Yale-New Haven in Connecticut, saw annual ED visits of between 13,000 and 115,000 patients per year under normal circumstances.

Typical ED and admissions data was compared from Jan. 1 of this year, to April 30. By mid-March, as COVID-19 began to take hold in the U.S., ED visits dropped dramatically. For example, while ED visits dropped by 63.5% at Mount Sinai Health, admissions of patients from the ED rose 149%; nearly 52% at Baystate and between 22% and 36.2% in the other systems studied.

As a result of the drop in ED visits and rise in admissions from those visits, the study’s authors concluded that “public health authorities and healthcare systems should provide guidance and resources to help patients determine the best place to receive care as the available healthcare capacity changes during the pandemic.”

A commentary accompanying the study authored by David Schriger, an associate JAMA editor and a member of the faculty of the emergency medicine department at UCLA School of Medicine, said the study should be considered a starting point about how patients should seek care if they are feeling unwell.

Schriger observed that “many hospitals and clinics rapidly instituted better access to practitioners and care coordinators via the telephone or telemedicine, providing patients with alternatives.” However, he also suggested that many low-income people who have no other provider to turn to other than the hospital ED are forgoing care — requiring a deeper discussion of healthcare inequities in the U.S.

Tenet’s profit more than triples in Q2 thanks to COVID-19 relief funds, cost cuts

  • Tenet’s profit more than tripled to $88 million for the second quarter despite a pandemic that has strained the healthcare industry, thanks to $523 million of income from federal relief funds, along with various cost-cutting initiatives, Tenet disclosed Monday.
  • The Dallas-based hospital operator beat Wall Street expectations on earnings but missed on revenue for its second quarter, generating revenue of $3.6 billion. That’s 20% lower than the second quarter of 2019.
  • The company did not issue an updated forecast for the year after pulling its guidance in April due to the uncertainty brought on by the novel coronavirus. Its stock was down slightly in morning trading Tuesday on the results.

Despite patient volume nearly falling off a cliff in April — the month the industry was hit hardest by the virus — Tenet reported volume shot back up to near normal in June to finish out the second quarter.

In fact, hospital surgeries were just shy (90%) of pre-COVID-19 volumes in the month of June. It’s quite the turnaround from April when hospital surgeries were down to 45% of expected volume, and surgeries at Tenet’s outpatient surgery unit, USPI, were nearly wiped out altogether, though they were back up to 80% of pre-COVID-19 levels by July.

Despite an improving picture, overall same-hospital admissions declined about 20% year over year in the second quarter.

​Tenet was particularly exposed to the effects of the virus as its outpatient branch USPI operates 264 ambulatory surgical centers, along with dozens of imaging centers and surgical hospitals. That unit reported operating revenue fell nearly 30% to $368 million for the quarter. Same-facility surgical cases fell nearly 42% year over year.

CEO Ron Rittenmeyer previously said he viewed May as the “beginning of the recovery” for hospital operations. The characterization has largely played out as procedures and volumes have rebounded in the following months even as some areas of the country have seen increasing cases that threaten to slow elective volumes.

Tenet’s hospital footprint is concentrated in 10 states — Alabama, Arizona, California, Florida, Illinois, Massachusetts, Michigan, South Carolina, Tennessee and Texas — many of which are currently experiencing surging COVID-19 cases.

Brian Tanquilut, an analyst with Jefferies, noted that investors are cautiously optimistic as the rebound does provide optimism but is also mitigated by the fact that Tenet has significant exposure to hotspots, especially south Florida, San Antonio and Phoenix.

“Our volumes in July have generally held steady or improved compared to June despite the spike of COVID cases in July in many of our markets,” CFO Dan Cancelmi said during Tuesday’s call with investors.

Tenet’s lower expenses also bolstered the surge in net income. Expenses for salaries, wages, and benefits were 13% lower in the second quarter compared to the prior-year period. Supply expenses were down almost 19%.

Despite the pandemic, Tenet and its peers for-profit hospital operators have seen profits buoyed by federal relief funds, sparking significant criticism amid a historic pandemic that’s thrown an estimated 50 million Americans off their jobs and shuttered the doors of many smaller practices.

Nashville-based HCA’s second quarter net income surged 40% compared with the prior-year period. Community Health Systems reported net income of $70 million after posting a substantial loss of $167 million the prior-year period. UHS also posted a bump in its second quarter net income thanks in large part to relief funds.

As of Monday, Tenet has received $1.5 billion in advanced Medicare loans, which must be paid back by April next year, and more than $850 million in grants from congressional relief packages.

6 states band together to secure rapid COVID testing

Bipartisan governors of six states have entered into a first-of-its-kind agreement to jointly purchase rapid coronavirus testing kits.

The governors — from Virginia, Louisiana, Massachusetts, Michigan, Ohio and Maryland — said the goal of the compact is to show private companies that there is significant demand to scale up the production of these tests, which deliver results in 15 to 20 minutes.

The states will also coordinate on policies and protocols regarding the testing technology.

Additional states, cities and local governments may join the compact in the coming days and weeks, the governors said.

The states are in discussions with Becton Dickinson and Quidel — the U.S. manufacturers of antigen tests that have already been authorized by the Food and Drug Administration — to purchase 500,000 tests per state for a total of three million tests.

Five months into the pandemic, the Trump administration has yet to develop an efficient testing system. In the absence of a national testing strategy, states have been left to come up with their own plans and secure their own equipment.

Across the country, the demand for tests has outstripped supplies, creating severe shortages and delaying results for unacceptably long periods of time.

The agreement would reduce the need for states to rely on overburdened commercial labs. For example, Quest Diagnostics said this week that the average turnaround time for a test result is five days. It’s an improvement over last month, when it said average results would take more than a week, but still creates a potentially dangerous waiting period.

“With severe shortages and delays in testing and the federal administration attempting to cut funding for testing, the states are banding together to acquire millions of faster tests to help save lives and slow the spread of COVID-19,” Maryland Governor Larry Hogan (R) said in a statement.

Hogan negotiated the deal during the final days of his tenure as chairman of the National Governors Association. The Rockefeller Foundation is willing to finance the program if needed.

Rapid antigen testing may not be the most accurate, but it can be used to help detect outbreaks more quickly and expand long-term testing in congregate settings such as schools, workplaces and nursing homes.

“Widespread testing is one of the most crucial tools we have to stop the spread of this virus and save lives,” Michigan Gov. Gretchen Whitmer (D) said in a statement. “I’m hopeful that the president and Congress will follow our lead and work together on a recovery package that includes support for states like ours so we can continue to protect our families.”

Jazz Pharmaceuticals EPS beats by $0.60, beats on revenue

Jazz Pharmaceuticals (NASDAQ:JAZZ): Q2 Non-GAAP EPS of $3.71 beats by $0.60; GAAP EPS of $2.06 beats by $0.21.

Revenue of $562.4M (+5.3% Y/Y) beats by $59.21M.

R&D $78.9M vs. $63.7M consensus.

Press Release

BioMarin EPS misses by $0.04, beats on revenue, expects FY20 GAAP profit

BioMarin Pharmaceutical (NASDAQ:BMRN): Q2 GAAP EPS of -$0.16 misses by $0.04.

Revenue of $429.5M (+10.8% Y/Y) beats by $12.1M.

For the FY20, BioMarin continues to expect to be profitable on a GAAP basis for the first time.

Press Release

COVID-19 test demand drives Luminex Q2 sales growth

Luminex (NASDAQ:LMNX) Q2 results:

Total revenue: $109.5M (+31.8%); Assays: $61.2M (+94.9%). Sales growth driven by demand for pandemic-related tests.

Net income: $12.5M (+355.1%); EPS: $0.27 (+345.5%).

Cash flow ops: $31.3M (+430.5%).

Q3 guidance: Revenue: at least $100M (+26%). Consensus: $107M.

2020 guidance: Revenue: at least $415M (+24%). Consensus: $387M.

Novavax rebounds from vaccine data-stoked selloff on clarified safety profile

Novavax (NASDAQ:NVAX) announces positive results from the first portion of its Phase 1/2 clinical trial evaluating its COVID-19 vaccine candidate, NVX-CoV2373, with and without the Matrix-M adjuvant, in healthy adults between 18 and 59 years of age.

NVX-CoV2373 was well-tolerated with mild reactogenicity events, mostly injection site pain and tenderness, while systemic events, less frequent, included headache, fatigue and myalgia (muscle pain) after dose 1 (5 µg). Reactogenicity was greater after dose 2 (25 µg) as expected since it was a higher dose. The average duration of events was less than two days.

On the immunogenicity front, the vaccine induced 100% neutralization titers in all participants. All subjects developed anti-spike IgG antibodies after one dose while many also developed wild-type virus neutralizing antibody responses. After the second dose, all participants developed wild-type virus neutralizing antibody responses. The IgG responses were highly correlated with neutralization titers.

The company has submitted the results for publication.

Management will host a conference call today at 5:00 pm ET to discuss the results.

Although absent from the press release, eight participants had to be hospitalized as reported by STAT News.

The data have apparently spooked investors. Shares are down 29% after hours although due for a rest. The stock is up over 39-fold this year.

Update: Shares have rebounded in after-hours trading, now down only 2%, after STAT News issued a correction to its story after communicating with the company. No participants required hospitalization.

CytoDyn’s leronlimab passes safety tollgate in late-stage COVID-19 study

In its first safety review, the independent Data Safety Monitoring Committee observed no data that would justify any changes to a Phase 3 clinical trial evaluating CytoDyn’s (OTCQB:CYDY) leronlimab in severely ill and critically ill COVID-19 patients. Consequently, it recommended that the study continue unmodified.

169 subjects are currently enrolled. A full interim analysis will be performed after 195 patients are enrolled per the protocol.