BREAKINGVIEWS-Vaccine slump risks a downward financial spiral

By Aimee Donnellan

DUBLIN, Feb 19 (Reuters Breakingviews) - During the pandemic, vaccine businesses were the pride of the pharmaceutical sector. The valuations of companies like Pfizer PFE.N and Moderna MRNA.O ballooned after immunisation researchers helped to end Covid-19 lockdowns at warp speed. But vaccine-heavy groups, a cohort that also includes Sanofi SASY.PA and GSK GSK.L, now face a borderline hostile U.S. government. It’s trickling down to venture capitalists and funding agencies, and is arguably making everyday citizens more hesitant to get shots. The danger is that these once-thriving businesses, along with their research capabilities, simply wither.

Mass immunisations, along with clean water and antibiotics, have utterly transformed the health of humanity in recent centuries. While there’s a long history of inoculations in Asian and African medicine, British physician and scientist Edward Jenner’s smallpox vaccine really kicked off the modern practice starting around 1800.

Vaccine innovation continues to this day, as shown during the 2020 pandemic. In the past 10 years, UK pharma group GSK rolled out an effective shot for shingles that provides 90% protection against a painful and often debilitating disease. The UK group and Pfizer have also created effective vaccines for RSV, a respiratory virus that impacts infants and older people. The immunisation slashes the risk of older patients being hospitalised by 82%. Meanwhile, Sanofi’s flu vaccine cut hospitalisations by nearly a third in people over 65.

These breakthroughs have also created lucrative businesses. In 2023, well before the start of U.S. President Donald Trump’s second term, GSK’s vaccine sales soared 25% thanks to its shingles and RSV shots. Meanwhile, Sanofi’s sales jumped 8% during the same period. However, in the past year these vaccine powerhouses have often seen their sales decline, with lower uptake of critical inoculations against meningitis, measles, polio, mumps and rubella.

There are many causes for this. But the companies often cite a less immunisation-friendly U.S. administration. Trump appointed vaccine sceptic Robert F. Kennedy Jr. as health secretary. In January this year, the U.S. government ended longstanding guidance that all children should receive shots against flu and three other diseases. It seems to be feeding a wider mistrust of inoculations among citizens, in the United States and elsewhere, which has led to a resurgence in diseases that have not been widely seen in the West for decades. Last year, the U.S. recorded its highest rate of measles since 1993. The country is now on the cusp of losing its measles elimination status from the World Health Organization. Britain, where the same infection is now surging in north London schools, already lost that status last month.

Declines in mass state-sponsored inoculations shouldn’t in theory be a huge problem for the big vaccine makers. Much of their revenue comes from higher-priced, newer immunisations. But perhaps surprisingly, GSK and Pfizer have also seen a significant decline in uptake for their RSV shots in the U.S. In the third quarter of last year, all of Pfizer’s bacterial vaccines suffered falls in revenue. Meanwhile, Sanofi reported a 2.5% decline in vaccine sales in the fourth quarter of 2025 and is forecasting “slightly negative” sales growth for the business this year. In other words, it seems like immunisation hesitancy is spreading and affecting all manner of inoculations.

This is denting valuations. Sanofi and Pfizer, for example, both traded at close to a 12 times forward price-to-earnings multiple five years ago. Now, they’re both around 9. Admittedly, there are many moving parts to these valuations. But it’s notable that Novartis NOVN.S, which does not have a major vaccine business, has risen to a multiple of 18 now compared with just under 14 in 2021.

One possible response is for CEOs to refocus on the rest of the world. Moderna boss Stéphane Bancel is hoping to generate 50% of the $17 billion vaccine maker’s revenue from international markets this year, a steep jump from the less than 40% it managed in 2025. Similarly, Pfizer CEO Albert Bourla said in November that vaccines were a “key area of focus in international markets”.

Yet non-U.S. markets are often less lucrative. It’s also hard to get away from the fact that the country has historically been the world’s largest financial backer of vaccine science. That means the American government’s negative views can impact the vaccine business wherever the pharma groups plan to sell, for example by limiting state research assistance. Last year alone, the U.S. National Institutes of Health cut $500 million that was earmarked for mRNA vaccine research. That refers to a relatively new type of inoculation using lab-made genetic instructions that tell human cells to make a harmless piece of a virus, triggering a helpful immune response. It was a much-hyped field until relatively recently.

Worryingly, the dour mood seems to be trickling down to some of the sector’s earliest funders: venture capitalists, who back nascent biotechnology companies. Venture financing for mRNA-based vaccines was just $90 million between the start of 2025 and October of that year, GlobalData figures show, which was 82% lower than in 2023. This threatens to choke off the pipeline of new innovative vaccine makers, many of which would otherwise end up being bought by big pharma groups. GSK is currently targeting 40 billion pounds of annual sales by 2031, and analysts reckon it may not be able to rely on any growth in its vaccine business to help.

Earlier this month, $113 billion Sanofi’s long-term CEO Paul Hudson left amid a flurry of disappointing drug trials and pain in the vaccine division. Meanwhile Moderna, which became a powerhouse of innovative inoculations during the pandemic, slashed its research and development budget by nearly a third last year and said it would no longer fund late-stage trials of vaccines. Its boss, Bancel, said the company could not make a return on investment if it didn’t have “access to the U.S. market”. Admittedly, on Wednesday he received more positive news when the U.S. Food and Drug Administration (FDA) said it would review Moderna’s flu vaccine application just a week after rejecting its initial submission, though it’s too soon to tell whether approval is likely. Amid the broader slowdown in vaccines, meanwhile, Pfizer has focused on dealmaking in other areas, like oncology and obesity.

The shift away from immunisations will mean fewer breakthroughs in newer research areas like cancer, sexually transmitted diseases and skin disorders. Moderna has shelved promising vaccines for the Epstein-Barr virus, shingles and herpes. In extremis, it all risks becoming a self-reinforcing downward spiral. Lower uptake of shots leads to lower sales and therefore smaller research budgets, crimping innovation and growth even further. In other words, vaccine hesitancy among citizens and the U.S. government risks being mirrored in pharma CEOs’ investment budgets.

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