>>> What to look at today - 28th of March 2023

Asian equities climbed along with European futures while the dollar traded lower as fears of broader contagion from the banking turmoil eased. A gauge of Asian shares climbed about 0.8%, with benchmark indexes rising in Hong Kong, Japan, South Korea and Australia. Contracts for US stocks also showed small gains. Traders have been cautiously inching toward a risk-on posture as jitters in the banking sector subside. Financial firms were among the best performers in Asia on Tuesday and looked set to snap a two-day loss. Finance stocks led the way on Wall Street on Monday, while energy producers gained as well. The tech-heavy Nasdaq 100 ended the session 0.7% lower, capping a two-week advance.  The two-year Treasury yield slipped back below the 4% level in Asia trading after surging 23 basis points Monday. Sentiment from the US session flowed across to trading in Australia and New Zealand, where rates on government debt climbed.  A gauge of dollar strength fell for a second day. The yen strengthened after Japan’s cabinet approved the use of some funds from the fiscal 2022 budget for measures to cushion the impact of inflation. Some investors in the market remain on the lookout for signals of a recession later this year as the Fed and other central banks could be forced to implement higher-for-longer rate hikes to tame inflation. JPMorgan’s chief strategist Marko Kolanovic said the first quarter “will likely mark the high point for equities this year,” recommending investors stay defensive in a research note.  One of Wall Street’s most prominent bears, Morgan Stanley strategist Michael Wilson was also cautious on stocks, saying earnings estimates and valuations need to come down. Asian shares related to digital currencies fell in the wake of Bitcoin’s drop. The token fell 2.7% Monday after the US Commodity Futures Trading Commission sued Binance Holdings Ltd. for allegedly breaking trading and derivatives rules. Bitcoin dropped slightly on Tuesday.  Oil steadied after posting the biggest daily rally since October when it rose by around 5% on Monday. Gold fluctuated. US After Hours PVH +9.7% making a nice move following JanQ earnings; LYFT +3.3% up on new CEO news; RSI -3.8% down after winding down Connecticut Lottery Corp partnership.

Nikkei +0.08% Hang Seng +0.62% CSI -0.12% Shanghai +0.07% Shenzen -0.22%

Eur$ 1.0814 CNH 6.8802 CNY 6.8808 JPY 130.64 GBP 1.2319 CHF 0.9145 RUB 76.7803 TRY 19.0966 WTI$ 72.73 -0.12% Gold 1960+0.18% BTC 26,933 -0.43% ETH 1,719 +0.66%

S&P +0.14% Nasdaq +0.10% EuroStoxx +0.44% FTSE +0.32% Dax +0.35% SMI +0.38%

Macro :
- Israel’s Netanyahu Pauses Legal Overhaul Push After Protests
- Gundlach Says Recession to Start in Few Months, Fed to Cut Rates
- US, Japan Strike Deal on Supply of Minerals for EV Batteries

Keep an eye on :
- ALB US : Albemarle Reports Proposal to Buy Liontown
- AMBUB DC : Ambu Has EU Regulatory Approval for Full Bronchoscope Portfolio
- BP/ LN : BP and Adnoc in Non-Binding Pact to Take Newmed Energy Private
- CLNX SM : Cellnex Says Bertrand Boudewijn Kan Stepping Down as Chairman
- DMP GY : Dermapharm Maintains FY Revenue Forecast, Misses Estimates
- DIS US : Disney Cuts Metaverse Unit as Part of Layoffs Plan: WSJ (1)
- ENGI FP : Engie Asks Shareholders to Reject Demand for Annual Climate Vote
- EVT GY : Evotec SE Sees 2023 Adjusted Ebitda EU115M to EU130M
- Feralpi IPO : Italy Steelmaker Feralpi Weighs Milan IPO: Messaggero
- FHZN SW : Flughafen Zurich Names Kevin Fleck New CFO
- HEN3 GY : Henkel Is Close to Selling Russian Assets, Vedomosti Says
- ISP IM : Intesa CEO Messina Total Compensation For 2022 Set at €7.2m
- Isar Aerospace : German Rocket Startup Isar Aerospace Raises $165m: FT
- KER FP : Rise of Rental, Resale, Recycle: Luxury's Secondhand Opportunity
- NTGY SM : Naturgy to Invest €117m in 145MW Spanish Energy Storage Projects
- NTGY SM : *NATURGY, STATKRAFT BID FOR ARDIAN SPAIN WIND FARMS: ECONOMISTA
- NXT LN : Next in Advanced Talks to Buy Cath Kidston: Sky News
- NIVIB SS : Nivika Fastigheter Offers 750m Shares
- NOEJ GY : Norma Sees 2023 Adjusted Ebit Margin About 8%, Est. 8.95%
- PCG US : PG&E Pledges $18 Billion to Cut Wildfire Risk in California
- QDT FP : Quadient FY Ebitda EU240M
- RAA GY : Rational FY Ebit Beats Estimates
- RL US : PVH 4Q Adjusted EPS Beats Estimates
- SCHA NO : Schibsted Launch Vertical-Based Model for Nordic Marketplaces
- TTK GY : Takkt Sees FY Ebitda EU120M to EU140M, Est. EU136.5M
- TEF SM : *TELEFÓNICA, ASTERION READY SALE OF 11 DATA CENTERS: EXPANSION
- TIT IM : Italy’s State Lender Plans Raising Offer for Telecom Italia Grid
- UU/ LN : United Utilities Keeps Expectations Unchanged
- WAC GY : Wacker Neuson Sees 2023 Ebit Margin 9.5% to 10.5%

>>> US After Hours Summary: PVH +9.7% making a nice move following JanQ earnings


After Hours Summary: PVH +9.7% making a nice move following JanQ earnings; LYFT +3.3% up on new CEO news; RSI -3.8% down after winding down Connecticut Lottery Corp partnership

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PVH +9.7%

Companies trading higher in after hours in reaction to news: FET +3.4% (awarded Saudi Arabia contract), LYFT +3.3% (David Risher to replace Logan Green as CEO, reiterates 1Q23 outlook), VFC +2% (moving higher in sympathy with PVH), RL +1.8% (moving higher in sympathy with PVH), PINS +0.8% (approves restructuring), FANG +0.6% (joins UN's oil and gas reporting program), MNKD +0.2% (names new COO), UBER +0.2% (moving higher in sympathy with LYFT), ET +0.1% (acquiring Lotus Midstream)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: RSI -3.8% (winding down partnership with Connecticut Lottery Corporation), IVR -3.7% (trims dividend; provides two-month update), ETNB -1.6% (stock offering), AIR -1.3% (distribution agreement with Cloud Cap Technology), NKLA -1.3% (CFO to retire; names new CFO), EVA -0.1% (co-founder returning as Executive Chairman)

FT : Generative AI set to affect 300mn jobs in the US and Europe

Generative AI set to affect 300mn jobs in the US and Europe
Technology could boost global GDP by 7% but also risks creating ‘significant disruption’

The latest breakthroughs in artificial intelligence could lead to the automation of a quarter of the work done in the US and eurozone, according to research by Goldman Sachs.

The investment bank said on Monday that “generative” AI systems such as ChatGPT, which can create content that is indistinguishable from human output, could spark a productivity boom that would eventually raise annual global gross domestic product by 7 per cent over a 10-year period.

But if the technology lived up to its promise, it would also bring “significant disruption” to the labour market, exposing the equivalent of 300mn full-time workers across big economies to automation, according to Joseph Briggs and Devesh Kodnani, the paper’s authors. Lawyers and administrative staff would be among those at greatest risk of becoming redundant.

They calculate that roughly two-thirds of jobs in the US and Europe are exposed to some degree of AI automation, based on data on the tasks typically performed in thousands of occupations.

Most people would see less than half of their workload automated and would probably continue in their jobs, with some of their time freed up for more productive activities.

In the US, this should apply to 63 per cent of the workforce, they calculated. A further 30 per cent working in physical or outdoor jobs would be unaffected, although their work might be susceptible to other forms of automation.

But about 7 per cent of US workers are in jobs where at least half of their tasks could be done by generative AI and are vulnerable to replacement.

Goldman said its research pointed to a similar impact in Europe. At a global level, since manual jobs are a bigger share of employment in the developing world, it estimates about a fifth of work could be done by AI — or about 300mn full-time jobs across big economies.

The report will stoke debate over the potential of AI technologies both to revive the rich world’s flagging productivity growth and to create a new class of dispossessed white-collar workers, who risk suffering a similar fate to that of manufacturing workers in the 1980s.

Goldman’s estimates of the impact are more conservative than those of some academic studies, which included the effects of a wider range of related technologies.

A paper published last week by OpenAI, the creator of GPT-4, found that 80 per cent of the US workforce could see at least 10 per cent of their tasks performed by generative AI, based on analysis by human researchers and the company’s machine large language model (LLM).

Europol, the law enforcement agency, also warned this week that rapid advances in generative AI could aid online fraudsters and cyber criminals, so that “dark LLMs . . . may become a key criminal business model of the future”.

Goldman said that if corporate investment in AI continued to grow at a similar pace to software investment in the 1990s, US investment alone could approach 1 per cent of US GDP by 2030.

The Goldman estimates are based on an analysis of US and European data on the tasks typically performed in thousands of different occupations. The researchers assumed that AI would be capable of tasks such as completing tax returns for a small business; evaluating a complex insurance claim; or documenting the results of a crime scene investigation.

They did not envisage AI being adopted for more sensitive tasks such as making a court ruling, checking the status of a patient in critical care or studying international tax laws.

FT : Western groups leaving Russia face obligatory donation to Moscow

Western groups leaving Russia face obligatory donation to Moscow
Move raises pressure on companies that have not made a complete exit since Ukraine was invaded

Every western company seeking to leave Russia and sell its assets in the country will now be obliged to make a direct donation to the Russian state, a commission on foreign investments in the country has said.

The ruling, published on Monday, raises the pressure on western groups that have yet to make a complete exit from Russia since its full-scale invasion of Ukraine began 13 months ago.

Under the revised rules, any decision to quit would leave companies facing the criticism that they are funding Russia’s war effort by making direct payments to the state budget.

Nataliia Shapoval, chair of the Kyiv School of Economics’ analytics centre, the KSE Institute, said the move had been “looming” since the summer. Foreign companies seeking to sell their Russian businesses have faced a growing number of restrictions.

“It just highlights that companies should be making decisions faster, because it won’t be getting any easier in the future,” Shapoval said.

Previously, companies leaving Russia could choose between making a “voluntary contribution” to Russia’s state budget — set at 10 per cent of the value of the sale — or acquiesce to having the payment from the sale deferred by several years.

“Many companies were eager to exit Russia as fast as they could, so they opted for this 10 per cent tax and cash straight away, instead of the uncertainty of deferred payment,” a person involved in a recent exit transaction said.

The tighter regime will leave executives seeking to exit with no option but to make a direct contribution to Russia’s budget. “The main difference between the new rules and the previous ones is that the companies do not have a choice any more,” said Ilya Rachkov, a partner at Nektorov, Saveliev & Partners. “It is a real property seizure.”

The decision by the commission affects hundreds of western companies that have indicated plans to withdraw from Russia but have not yet completed their exit.

The KSE Institute monitors around 1,400 foreign companies that have legal entities in Russia and revenues of at least $5mn a year. Of these, only 206 have fully sold their Russian divisions.

Some have simply chosen to stay. Many others, however, have been trying to withdraw but have been trapped in a long and convoluted process, as each transaction must be negotiated with the Russian government commission on foreign investments.

A person involved in one of the ongoing exit negotiations said that around 2,000 applications were waiting for approval.

“The commission meets three times a month and considers not more than seven applications per meeting — so you can do the maths,” the person said. The finance ministry did not respond immediately to a request for comment.

The first exit deal involving a “voluntary donation” to be publicly disclosed was by Norway’s Wenaas after the sale of its hotels in Russia to Sistema, the Russian conglomerate controlled by oligarch Vladimir Yevtushenkov, who is under UK sanctions. Sistema said in February the deal was priced at “up to €203mn, including a 10 per cent contribution to the budget of the Russian Federation”.

Other criteria of exit published by the state’s commission on foreign investment in December included accepting hefty discounts on the business value assessed by an independent appraisal company.

“We would call it criteria for rejection, not for approval. The government is not required to issue approval if the business meets all the conditions,” said Alan Kartashkin, a partner at the law firm Debevoise & Plimpton.

>>> US Close Dow +0,60% S&P +0,16% Nasdaq -0,47% Russell +1,08%

Closing Stock Market Summary

The new week got started on a mixed note after the weekend went by without additional worrisome news from the banking sector. Instead, sentiment around the bank industry shifted today after investors learned that First Citizens Bancshares (FCNCA 895.61, +313.06, +53.7%) will acquire $72 bln of Silicon Valley Bank's assets at a discount of $16.50 bln.

Market participants were also reacting to a Bloomberg report indicating that U.S. authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank (FRC 13.82, +1.46, +11.8%) more time to shore up its balance sheet.

Recently embattled regional bank stocks like Western Alliance (WAL 34.05, +1.00, +3.0%) and PacWest Bancorp (PACW 9.88, +0.33, +3.5%) closed with decent gains, albeit off their highs for the day. The SPDR S&P Bank ETF (KBE) was up 2.2% and the SPDR S&P Regional Bank ETF (KRE) closed with a 0.9% gain. 

Despite relative strength from the banking sector, the S&P 500 and Dow Jones Industrial Average closed with only slim gains while the Nasdaq was pinned in negative territory at the close. The main indices were feeling the weight of lagging mega cap stocks, which helped drive a 0.7% loss in the Vanguard Mega Cap Growth ETF (MGK) versus a 0.7% gain in the Invesco S&P 500 Equal Weight ETF (RSP). 

Most of the S&P 500 sectors closed with a gain led by energy (+2.1%), which was boosted by rising oil prices. WTI crude oil futures rose 5.5% to $73.05/bbl. 

The financial sector (+1.4%) was another top performer along with industrials (+0.8%) and materials (+0.7%). On the flip side, the heavily weighted communication services (-1.1%) and information technology (-0.9%) sectors were the worst performers along with real estate (-0.4%). 

Notably, small and mid cap stocks outperformed their larger peers today. The Russell 2000 rose 1.1% and the S&P Mid Cap 400 was up 0.9% at the close.

Treasuries settled the session with losses across the curve. This followed today's $42 bln 2-yr note auction, which met weak demand. The 2-yr note yield rose 23 basis points to 3.79% and the 10-yr note yield rose 15 basis points to 3.53%. The U.S. Dollar Index fell 0.2% to 102.88.

  • Nasdaq Composite: +12.4% YTD
  • S&P 500: +3.6% YTD
  • S&P Midcap 400: -0.2% YTD
  • Russell 2000: -0.4% YTD
  • Dow Jones Industrial Average: -2.2% YTD

Looking ahead to Tuesday, market participants will receive the following economic data:

  • 8:30 ET: February advance goods trade deficit (prior -$91.50 bln), advance Retail Inventories (prior 0.3%), and advance Wholesale Inventories (prior -0.4%)
  • 9:00 ET: January FHFA Housing Price Index (prior -0.1%) and January S&P Case-Shiller Home Price Index (Briefing.com consensus 2.5%; prior 4.6%)
  • 10:00 ET: March Consumer Confidence (Briefing.com consensus 101.5; prior 102.9)

There was no U.S. economic data of note today. 

WSJ : Commercial Property Debt Creates More Bank Worries (from last week 21/03)

Commercial Property Debt Creates More Bank Worries
Large number of office defaults could force banks to mark down value of these and other loans

A record amount of commercial mortgages expiring in 2023 is set to test the financial health of small and regional banks already under pressure following the recent failures of Silicon Valley Bank and Signature Bank.

Smaller banks hold around $2.3 trillion in commercial real estate debt, including rental-apartment mortgages, according to an analysis from data firm Trepp Inc. That is almost 80% of commercial mortgages held by all banks.

With the banking industry in turmoil, regulators and analysts are growing increasingly concerned about commercial real estate debt, particularly loans backed by office buildings, according to industry participants. Many skyscrapers, business parks and other office properties have lost value during the pandemic era as their business tenants have adopted new remote and hybrid workplace strategies.

High interest rates also have wreaked havoc with commercial property valuations. Many owners with floating-rate mortgages have to pay much more monthly debt service, cutting into their cash flows. Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.

This year will be critical because about $270 billion in commercial mortgages held by banks are set to expire, according to Trepp—the highest figure on record. Most of these loans are held by banks with less than $250 billion in assets.

If those loans pay off, it would reassure markets. But a large number of defaults could force banks to mark down the value of these and other loans, analysts say, reinforcing fears over the financial health of the U.S. banking system.

Many of these borrowers will have a hard time paying off their loans, said Tomasz Piskorski, the Edward S. Gordon professor of real estate at Columbia Business School. “The destruction of value is quite big,” he said.

While a number of banks have seen drops in the value of their bondholdings—a key factor in Silicon Valley Bank’s collapse—figuring out by how much the value of their mortgages has dropped is trickier because they aren’t publicly traded and every building is different.

In a recent paper, a group of economists including Mr. Piskorski estimated that the value of loans and securities held by banks is around $2.2 trillion lower than the book value on their balance sheets.

That drop in value puts 186 banks at risk of failure if half their uninsured depositors decide to pull their money, the economists estimate. Real-estate loans account for more than a quarter of the shortfall, said Mr. Piskorski.

At the median U.S. bank, commercial real-estate loans account for 38% of loan holdings, according to an analysis by KBW Research.

The good news is that banks lent more conservatively in recent years compared with the period before the 2008 financial crisis. Many buildings might still be worth more than their mortgages even if they suffer a loss in value.

“The saving grace here is that you do have a decent-sized cushion,” said Frank Schiraldi, a stock analyst at Piper Sandler.

Also, government regulators have given banks ways to avoid taking losses even when loans are in trouble and are restructured to give borrowers more time and more flexibility to pay what they owe. Much of the guidance the Federal Reserve and other regulators are following was enacted during the global financial crisis to shore up the economy.

For example, in 2009 regulators issued a policy statement that allowed banks to keep loans on their books at full value in many situations even if the property backing the loan was worth less than the loan balance. While banks had a reasonable expectation of being repaid, critics warned at the time that this guidance would hurt the economy in the long run because the pain was only being deferred.

But the strategy was successful. Commercial property values rose steadily in the years after the crisis thanks in large part to low interest rates.

Eventually, many borrowers were able to pay off the loans that were modified and extended during the tough years. Regulators “turned out to be correct,” said Tyler Wiggers, a senior staff member at the Fed in the aftermath of the fiscal crisis who is now an adjunct instructor at the University of Cincinnati’s department of finance.

The Federal Reserve in September said it planned to revisit its financial-crisis-era guidance regarding commercial property restructurings but noted that new policy would “build on existing guidance.” The new policy “is timely in the postpandemic era, as trends such as increased remote working may shift historic patterns of demand…in ways that adversely affect the financial condition and repayment capacity” of commercial property landlords, the Fed said.

Still, a flexible approach to real estate workouts among regulators has limitations. Banks are still typically required to cut the value of the debt on their books if a borrower defaults. Already the number of defaults is growing, partly because of high interest rates, work from home and tech layoffs. Landlords that have defaulted include Pimco and Brookfield Asset Management.

Trepp reported earlier this month that the delinquency rate for commercial mortgage-backed securities increased 0.18 percentage point in February to 3.12%, the second-largest increase since June 2020.

Moreover, if interest rates stay at current high levels, low rates won’t come to the rescue of banks’ commercial property portfolios as they did in the years following the financial crisis. Indeed, a rise in interest rates would further erode the values of these portfolios.

The Fed recently said it would accept bonds and other assets at face value as collateral from banks, making bank runs less likely. Still, small and regional banks could run into trouble quickly if they have to sell commercial property loans to raise capital, said Richard Jones, a partner with law firm Dechert LLP.

In such a situation, the banks likely would be required to reclassify loans as being held for sale and that often means valuing them at what their collateral is currently worth rather than the face value of the loan, he said.

“We are in a very precarious position now.” said Mr. Piskorski, the Columbia Business School professor.

WSJ : Russia Supplies Iran With Cyber Weapons as Military Cooperation Grows

Russia Supplies Iran With Cyber Weapons as Military Cooperation Grows
Tehran is receiving advanced surveillance software after providing drones for Ukraine battlefield

Russia is helping Iran gain advanced digital-surveillance capabilities as Tehran seeks deeper cooperation on cyberwarfare, people familiar with the matter said, adding another layer to a burgeoning military alliance that the U.S. sees as a threat.

The potential for cyberwarfare collaboration comes after Iran has, according to U.S. and Iranian officials, sold Russia drones for use in Ukraine, agreed to provide short-range missiles to Moscow and shipped tank and artillery rounds to the battlefield. Tehran is seeking the cyber help along with what U.S. and Iranian officials have said are requests for dozens of elite Russian attack helicopters and jet fighters and aid with its long-range missile program.

Russia and Iran both have sophisticated cyber capabilities and have long collaborated with each other, signing a cyber-cooperation agreement two years ago that analysts said focused mostly on cyber-defense networks. Moscow has long resisted sharing digital-offensive capabilities with Iran in the past, for fear they will end up being sold later on the dark web, the people said.

Since the start of the war in Ukraine, Russia has provided Iran with communication-surveillance capabilities as well as eavesdropping devices, advanced photography devices and lie detectors, people familiar with the matter said.

Moscow has likely already shared with Iran more advanced software that would allow it to hack the phones and systems of dissidents and adversaries, the people said. Russian authorities have determined that the benefits of advancing the military relationship with Iran outweigh any downsides, the people said.

The Iranian government used the internet to blunt the impact of a nationwide protest movement last year, slowing down web traffic in target areas to stop the spread of videos and communications among protesters. It also used digital surveillance tools to track and arrest protesters.

Russia’s PROTEI Ltd has begun providing internet-censorship software to Iranian mobile-services provider Ariantel, according to documents published by the Citizen Lab, a University of Toronto-based research center. Citizen Lab said there is evidence that the PROTEI tools are part of a developing mobile-phone system that would “enable state authorities to directly monitor, intercept, redirect, degrade or deny all Iranians’ mobile communications, including those who are presently challenging the regime.”

In Russia, PROTEI develops hardware and software designed to help governments monitor communications on phone lines, emails and credit-card transactions, among other things, according to cybersecurity analysts. The company has contracts with the Russian Ministry of Defense.

The Russian government, Ariantel, PROTEI and the Iranian delegation at the United Nations in New York didn’t respond to requests for comment.

Iran has long worked to develop its cyber weapons into a more sophisticated program after years of being seen as a second-tier digital-warfare power behind the U.S., Russia, China and the U.K.

Iranian government hackers and groups aligned with the regime have conducted disinformation campaigns, carried out supply-chain attacks and hit infrastructure in rival nations such as the U.S. and Saudi Arabia. Israel has accused Iran of trying to hack its water system and, last month, said a group affiliated with Iranian intelligence conducted a cyberattack on a top Israeli university.

The country’s cyberwarfare program has its origins in the government’s response to 2009 protests over elections that the opposition said were rigged for then-President Mahmoud Ahmadinejad, said Annie Fixler, a cyber policy analyst at the Foundation for Defense of Democracies, a Washington think tank that is often critical of Iran. The government’s focus then was on surveillance, censorship and crushing dissent; Russia would offer more sophisticated ways of monitoring communications inside the country, she said.

“Given Russia’s superior capabilities, any amount of knowledge transfer would improve Iran’s cyber capabilities,” Ms. Fixler said.

When Russia began deploying Iranian-made drones on the Ukraine battlefield, the two countries deepened an alignment that began with the Syrian civil war, where they helped President Bashar al-Assad beat back a rebellion. They have set aside differences that date back centuries to align against their mutual enemies, said Mohammad Ayatollahi Tabaar, an associate professor specializing in Middle East politics at Texas A&M University’s Bush School of Government and Public Service.

“Feeling cornered by the U.S. and its allies, both Iran and Russia seem determined to make this alliance work,” Prof. Tabaar said.

FT : BioNTech forecasts slump in revenues as demand for Covid jab wanes

BioNTech forecasts slump in revenues as demand for Covid jab wanes
Expected fall highlights challenges for pharmaceutical companies that experienced pandemic windfall

Vaccine maker BioNTech has forecast a worse than expected slump in revenues this year as demand for coronavirus immunisation wanes, underlining the scale of the challenge facing companies that enjoyed windfalls from the pandemic. 

The German biotech company, Pfizer’s partner for the Covid-19 vaccine, said on Monday that revenues from Covid vaccines would drop to about €5bn in 2023. That compares with total revenues of more than €17bn in 2022 and €19bn the year before that, the vast majority of them generated by coronavirus jabs. 

The drop was worse than market expectations, with analysts forecasting total revenues of almost €8bn in 2023, according to Bloomberg data. 

BioNTech, which partnered with US pharmaceutical group Pfizer to develop a Covid jab that became the world’s bestselling by revenue, said that adaptations for new Covid variants would lead to some increased demand. But it also anticipated “fewer primary vaccinations and lowered population-wide levels of boosting”.

The expected revenue plunge highlights the challenges for global pharmaceutical companies that reaped the benefits from the pandemic and must now forge ahead with new products. Yet their arrival on the market may not come soon enough to cushion the loss in revenue.

Rival Moderna — which uses messenger RNA for its vaccine — has reported a similar slump in projected revenues, while Novavax, a late-to-market maker of a Covid jab that uses a more traditional technology, this month warned about its ability to continue to do business amid a decline in demand.

Research published in October by the health data analytics group Airfinity said that, while vaccine makers had begun raising prices, this would not fully compensate for the drop in demand for jabs in 2023. It expects 1.6bn Covid vaccine doses to be delivered this year, compared with 3bn in 2022 and 5.7bn in 2021.

BioNTech, whose messenger RNA helped it rocket to international fame during the pandemic, has been funnelling money into using the technology to treat cancer as it seeks to plough its windfall profits from the pandemic into diversification.

This year it announced it would buy the UK artificial intelligence start-up InstaDeep for as much as £562mn as part of an effort to harness machine learning to improve the process of discovering new drugs. It also unveiled a plan to partner with the UK government to enrol up to 10,000 patients in clinical trials for cutting-edge oncological treatments.

Jens Holstein, the company’s chief financial officer, said that BioNTech’s strong performance in 2022 would “provide a springboard to accelerate and build upon” a diversified pipeline of drugs and fund research and development in the years ahead. 

He said that, although Covid vaccines would generate lower revenues, they would remain a significant source of revenue, adding that the company would continue to invest in R&D as well as mergers, acquisitions and collaborations.

Its partner Pfizer, flush with the cash it reaped during the pandemic, this month announced it would buy biotech company Seagen for $43bn — the biggest healthcare deal on record since AbbVie bought Allergan for $63bn in 2019.

Suzanne van Voorthuizen, analyst at Dutch bank Van Lanschot Kempen, said that BioNTech is now entering its “post-pandemic life” although she is bullish about the company’s future, noting it has more than €20bn in cash.

“They always had a broad pipeline with more than 20 programmes before the pandemic,” she said. “The pandemic caused one programme to leapfrog everything. And it now gives them a source of funding to help deploy the rest of their pipeline.”