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Moody’s reduces outlook for pharma industry, Pfizer to provide additional COVID vaccine doses

Yahoo Finance's Anjalee Khemlani joins the Live show to discuss Moody's outlook for pharmaceutical industry as well as reports that Pfizer is looking to provide additional COVID-19 vaccine doses.

Video Transcript

- Moody's has revised its outlook for pharma stocks from positive to stable, saying they expect slower growth for the companies than previously expected. Yahoo Finance's senior health care reporter Anjalee Khemlani joins us with the details. Anjalee.

ANJALEE KHEMLANI: That's right, Brian. As you noted, Moody's coming out with this report. And some of those negatives that they're looking at should not come as a surprise, in particular the waning of demand on COVID treatments and vaccines, as well as the drug pricing legislation that we've seen in Congress. Meanwhile, others that are very company specific, and particularly impacting some of those larger pharma companies like a weak outlook on generics in large part due to patent threats and the cliffs that are upcoming in 2023 and beyond.

But we also see some positives there with acquisition activity remaining strong, supply chain resilience. That is particular to this sector. They haven't really been impacted as much as other rest of the market. Meanwhile, also immunology, oncology, and diabetes in particular parts of the industry that remain strong and have been of course we know they have long been really profitable parts of the portfolio there. So that remains the outlook. They said that they could change their outlook later this year if anything changes. I want to just point out that that threat on the drug pricing, of course, because of what's going on in Congress, we've seen that in the past before. So it's going to be interesting to see if all of it does in fact play out this time around.

- Anjalee, while we have you, you're also watching some major announcements for Pfizer on the vaccine, and also the COVID antiviral pill front. What do we know there?

ANJALEE KHEMLANI: That's right. So Pfizer specifically announcing that it is applying for full approval of its COVID-19 treatment Paxlovid. And that really sets the tone for what we're looking at for fall, which could be with a lack of funding from Congress, a reduction in government funding, and as a result, the need to be on the commercial market. Meanwhile, we also know that on the vaccine front, the US government has already committed to purchasing 105 million more doses of that COVID-19 vaccine from Pfizer, specifically with an option for 195 million more. In total, about $3 billion there.

Now, that comes also on the heels of the FDA's announcement after that panel meeting earlier this week to commit to a bivalent vaccine, which includes the omicron's subvariants BA5 and BA4. That's important to understand because that changes the production timeline for the companies that are going to need to meet this demand, in particular Moderna and Pfizer. They both had varying degrees of efficacy when they looked at clinical-- sorry, at preclinical data at this meeting. So it requires a lot more data to understand. But the FDA is pushing this right now. And that's something that came up in discussion. It was debated heavily this past week.

So it's interesting to see this decision. We also know the CDC has to weigh in. But as it stands right now, the impact is that we're looking at the latest strains of the coronavirus as well as the original strain in order to provide protection is the decision the FDA has granted us right now. And we know that they are looking for an October boosting campaign. And the companies have said that if they need to pivot to a BA4, BA5 strain, their timelines for production do push into that territory of October, early November. So it could-- we could see slight delays. But we'll have to wait and see there.

- Anjalee Khemlani, thanks so much.