AstraZeneca has signed its first for-profit deals for its Covid-19 vaccine, moving away from the completely non-profit model that it used during the pandemic.
The Anglo-Swedish drugmaker is now expecting the vaccine will move to “modest profitability” as new orders are received. The shot, developed with the University of Oxford, will remain non-profit for developing countries.
AstraZeneca committed to selling the vaccine “at cost” for the duration of the pandemic, as part of its agreement with Oxford.
Pascal Soriot, AstraZeneca’s chief executive, said the company had consulted with experts and concluded Covid-19 was entering an “endemic phase” and that it would be the right time to switch contracts for many countries in the next year. He added that, in the fourth quarter, the majority of doses would still be under existing non-profit contracts.
Mr Soriot said profitability would be "far lower" than for rival Pfizer, which has said its margin is in the high 20 percentage points, split with partner BioNTech.
He also stood by AstraZeneca’s decision to take on the vaccine on a non-profit basis.
“I absolutely don’t regret it,” he said. “We are all very proud as a company of the impact we’ve had . . . We are the second largest vaccine in the world in terms of volume, we saved millions of hospitalisations and we estimate about a million lives.”
Vaccines unit
The move comes after AstraZeneca announced it was creating a vaccine and immune therapies unit, to bring together its Covid-19 products and its other treatments for viral respiratory illnesses.
The company booked $1 billion (€873 million) in revenues from the vaccine in the third quarter, far less than rivals that charge more. Pfizer generated $13 billion in sales from its vaccine and Moderna reported revenue of $5 billion, the vast majority from its Covid-19 vaccine.
The profits from vaccine sales in the fourth quarter will cover the costs of investment in AstraZeneca’s antibody treatment for Covid-19.
Mr Soriot told the Financial Times in May that he did not know when they would consider the pandemic over and that it could be on a country by country basis.
Campaigners for patent waivers on medicines responded angrily to the news, noting that the AstraZeneca vaccine was 97 per cent publicly funded.
“This moment was always going to come, and it’s exactly why public health experts have demanded a waiver of intellectual property on Covid-19 vaccines,” said Nick Dearden, director of Global Justice Now. “Corporations will always put profits first.
“In the future, public funding for the development of essential medicines must be conditional on global access.”
The campaign group also questioned precisely which low income countries will continue to benefit from non-profit supplies of vaccine.
AstraZeneca did not have a significant vaccine business before its partnership with Oxford. Delays in deliveries, debates about the data and concerns about a rare blood clotting side effect have contributed to the company losing market share in developed countries to rivals using new mRNA technology, even though it has a cheaper and easier to transport vaccine.
Financial results
AstraZeneca beat expectations on revenues but missed on earnings in the third quarter, sending shares down about 4 per cent to 9,007p in morning trading in London.
Total sales soared by 48 per cent on constant exchange rates to $9.9 billion, above the consensus forecast for $9.6 billion. Excluding the vaccine, sales rose 32 per cent, driven by oncology drugs, growth in emerging markets and the addition of Alexion Pharmaceuticals, the rare diseases company AstraZeneca bought for $39 billion.
But adjusted earnings per share of $1.08 fell short of the average analyst estimate of $1.24, after one-off charges related to the integration of Alexion.
AstraZeneca did not change its earnings guidance for the full year, still expecting core earnings per share to between $5.05 and $5.40. Total revenue is expected to grow by a mid-to-high twenties percentage, and a low twenties percentage excluding the Covid-19 vaccine.
Mr Soriot said he expects a “solid finish” to the year. “Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth,” he said. – Copyright The Financial Times Limited 2021
