The S&P 500 had a great year, with stocks closing 2023 up by about 25%. But executives of one prominent company will not be cracking champagne on New Year’s Eve in celebration of its stock price.
Pfizer was down 44% when markets opened on Friday. The pharmaceutical giant began 2023 with its stock at $51, only to see shares plummet to $26 in mid-December, a ten-year low. Though shares have nudged up slightly since then, its market cap stands at $162 billion, less than half of what it was just two years ago. When markets closed on Friday, it became official: Pfizer’s stock had its worst year of the 21st century, a distinction the company achieved even as the S&P saw massive gains and rival pharmaceutical company Eli Lilly saw the price of its shares explode by nearly 60%.
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Ritholtz Wealth CEO Josh Brown recently observed why Pfizer stock collapsed while Eli Lilly saw its market cap reach more than half a trillion dollars. "While Pfizer was doubling and tripling down on their COVID-19 vaccines and the Paxlovid pills for treatment, Lilly was focused on anti-obesity, which is the real disease battle of the decade to come,"
It’s no secret that Pfizer bet big on its COVID-19 vaccines, a strategy that looked promising in early 2021 when millions of vaccines were being administered daily. Things have changed a lot since then. CDC data shows that demand for COVID-19 vaccines fell off a cliff in 2023, falling to about 40,000 daily doses, down from a peak of more than 4 million. Pfizer responded to this weakened demand by jacking up the price of its vaccine. Despite the price increase, low demand for COVID-19 products led the company to slash its revenue forecast twice in 2023.
Why demand for vaccines plummeted in 2023 is a delicate question. But there are several plausible reasons. For starters, most Americans have mentally moved on from the pandemic. COVID-19 deaths are still occurring, but the low demand for vaccines shows that most people are not very concerned about dying from it — a response not irrational when one considers that those who have the most to fear from the virus are the elderly and immunocompromised.
And then there are the vaccines themselves. Even though the Department of Health and Human Services notes that the vaccines are free, there is a clear reluctance to take them.
The latest CDC data show that just 17% of Americans have received the bivalent Covid-19 booster. This suggests that Americans see little benefit in taking the vaccine, and some may harbor concerns about their safety. Talking about vaccine injuries was verboten in 2021, but the pharmaceutical companies themselves now concede that "the vaccines may not be for everyone." Myocarditis might be a rare side effect of COVID-19 vaccination, but it is a real one, and it’s an affliction that young men, in particular, appear prone to after vaccination. And new research out of Japan suggests that serious vaccine injuries could be more common than previously believed.
Finally, and perhaps most obviously, the demand for vaccines plummeted because the state stopped using force to encourage people to take them. It seems like a long time ago now, but people were fired for not getting vaccinated. Students were expelled. Soldiers were discharged. It’s important to understand that these actions stemmed directly from federal policy, such as President Joe Biden’s 2021 executive order, and other coercive actions designed to disrupt people’s lives if they refused to get vaccinated.
"It's been proven that when you make it difficult for people in their lives, they lose their ideological bull****, and they get vaccinated," Dr. Anthony Fauci, the former director of the National Institute of Allergy and Infectious Diseases and the architect of U.S. COVID-19 policy, can be heard saying in a recently released video. These coercive policies increased Covid vaccination—and Pfizer’s profits—in the short term, but they came with great costs in the long term, including a collapse in trust of public health.
Pfizer’s precise role in all of this is unclear, but the company stands accused of misrepresenting the efficacy of its vaccine and conspiring to censor Americans. This, along with the company’s collapsing revenue forecasts, clearly has investors nervous.
Where Pfizer’s stock goes in 2024 is anyone’s guess, but its dismal 2023 performance shows that crony capitalism — what the Nobel Prize-winning economist F.A. Hayek described as "a comprehensive central direction of economic activity" involving big government and big business — doesn’t always pay.
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In fact, sometimes it backfires horribly.
Jon Miltimore (@miltimore79) is editor-at-large at the Foundation for Economic Education. His substack can be found here.