Healthcare companies that came up with effective Covid-19 vaccines, treatments and tests are seeing a huge financial payoff and are starting to spend their cash, while grappling with questions about whether the growth is sustainable.
Companies including Pfizer Inc. and Moderna Inc. so far have reported at least $79 billion in combined global sales of Covid-19 vaccines and treatments for 2021, according to a Wall Street Journal review of recent earnings reports.
Diagnostic sales also have been strong for companies including Abbott Laboratories, which had $7.7 billion in Covid-19 test sales last year.
It's a market that didn't exist prior to the pandemic. Many companies attempted to find pandemic countermeasures during 2020 but only some were successful.
Sales from the resulting products kicked into high gear in 2021, strengthening profits while adding to cash reserves.
Some companies are investing the windfalls in employee bonuses, share repurchases, internal research efforts to develop new drugs and vaccines, or pursuing acquisitions of other companies to bolster research and development pipelines.
But sales are already declining for certain drugs that are less effective against newer variants of the coronavirus, including products from Eli Lilly & Co. and Regeneron Pharmaceuticals Inc.
Some treatments are likely to be displaced by the new antiviral pills.
Diagnostics makers are being cautious about sales expectations this year because demand has been tough to predict as surges in coronavirus cases give way to lulls. Demand for Covid-19 tests in the U.S. has dropped as the Omicron variant wave dissipates.
Public-health and patient advocates have accused the companies of profiteering during the deadly pandemic. They've said companies should do more to expand access to Covid vaccines and treatments globally, such as sharing vaccine manufacturing technology to supply lower-income countries.
A Pfizer spokeswoman said the company has provided 1.2 billion vaccine doses to low- and middle-income countries at not-for-profit prices, and expects to have delivered a total of two billion doses for these countries by the end of 2022.
Moderna chief executive Stephane Bancel noted the company had never launched a product before the pandemic, and said it has invested several billion dollars in boosting vaccine manufacturing capacity.
The company has also previously pledged to provide up to 650 million doses to the Covax initiative that supplies vaccines to lower-income countries.
Forecasts from companies and Wall Street analysts point to at least $90 billion in combined drug and vaccine sales for full-year 2022, a Journal review found.
Last week, Moderna reported $17.7 billion in sales of its Covid-19 vaccine Spikevax for 2021, and predicted it would generate at least $19 billion in Covid vaccine sales this year.
For Moderna, which didn't have any marketed products before the pandemic, the vaccine has been transformational, pushing it into the top ranks of the biopharmaceutical industry.
The Cambridge, Massachusetts-based company gave employees at the manager level and below a one-time bonus in January. And it is using its vaccine proceeds to double spending on research and development, pursue acquisitions and license deals, and to increase its stock buyback program.
The company is developing a combination flu and Covid vaccine, and is testing experimental vaccines against other viruses in late-stage studies.
"What you're going to see is really a huge expansion of the pipeline," Mr. Bancel said in an interview. "Cash is a thing we've been lacking to scale this platform and now we have it. So we're going to invest as much as we can."
Moderna now has about $17.6 billion in cash, cash equivalents and investments, or about 13 times the amount it had before the pandemic. Its workforce has more than doubled from a year ago to 3,000 employees.
New York-based Pfizer, already one of the biggest pharmaceutical companies before the pandemic, reported $36.8 billion in global sales for its Covid-19 vaccine, Comirnaty, in 2021, the highest one-year tally for a pharmaceutical product in history.
Pfizer co-developed the vaccine with BioNTech SE.
And Pfizer recently introduced the antiviral pill Paxlovid, which has shown strong efficacy in clinical trials.
Pfizer expects combined sales from these Covid products of at least $54 billion for 2022 -- an amount that exceeds total revenue for most other drugmakers.
The expected Covid-19 sales could push Pfizer's total company sales over $100 billion for the first time in its history. Some analysts say Pfizer could top forecasts for both Covid and overall revenue.
"It's almost another Pfizer that you're adding on top of Pfizer," said Mizuho Americas analyst Vamil Divan.
Pfizer has used some of its windfall to reward employees.
The company said it is providing a one-time Covid-19 bonus to employees who aren't normally eligible for bonuses.
And Pfizer plans to put the influx of cash to use on acquisitions and license deals, focusing on adding drugs in areas such as oncology, immunology and rare diseases.
The company faces declines in certain non-Covid products later this decade due to patent expirations, so doing deals would help Pfizer replace that revenue.
"Acquisitions are obviously very much in the cards, but strategic partnerships and alliances are as well," Pfizer CEO Albert Bourla said on the company's earnings call in early February.
The Covid revenue outlook is uncertain for some companies.
If the pandemic transitions to an endemic phase, companies may sell fewer doses of drugs and vaccines, but may raise prices to offset that, said Ronny Gal, a Bernstein analyst.
He said companies are asking themselves: "How do we turn this into an ongoing business, and how big will it be?"
Some makers of the earliest treatments for Covid-19, monoclonal antibodies, are seeing declines. Use of antibodies from Lilly and Regeneron has been restricted in the U.S. because they lost potency against the Omicron virus variant.
The difficulty of predicting what lies ahead in the pandemic has caused some companies to lay out various scenarios to investors.
Executives with Covid diagnostic and treatment maker Roche Holding AG of Switzerland said one scenario is that variants continue to cause waves of new infections and reinfections, well into 2023.
But they said the more likely scenario is that immunity conferred by vaccines and infections provides long-lasting protection, of at least four years. Sales of Roche Covid products would be less under this scenario.
Not all sales of Covid products are highly profitable.
GlaxoSmithKline PLC's antibody treatment Xevudy is one of the few that work against Omicron, so it has been in demand.
But Glaxo warned that its success will drag on profit growth because it is a low-margin product for them.
Xevudy made nearly 1 billion pounds, equivalent to $1.36 billion, for Glaxo in 2021, and was responsible for the majority of the U.K. company's revenue growth.
AstraZeneca's Covid-19 vaccine was its second biggest seller in 2021, at $4.1 billion in revenue. But the company pledged to sell the shot at-cost in the pandemic emergency and so it made little profit from it.
The company lost money on the vaccine in the first half of the year and turned only a negligible profit since.
AstraZeneca says it will now sell it at profit in some markets.
Denise Roland, Joseph Walker and Jared S. Hopkins contributed to this article.