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 to transition the vaccine to “modest profitability” as new orders are received. The shot, developed with the University of Oxford, will remain non-profit for developing countries.
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 $1bn in revenues from the vaccine in the third quarter, far less than rivals that charge more. Pfizer generated $13bn in sales from its vaccine. It has said its margin is in the high 20 percentage points, which is split with its partner BioNTech. Moderna reported revenue of $5bn, 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.
AstraZeneca was committed to selling the vaccine “at cost” for the duration of the pandemic, as part of its agreement with Oxford. Chief executive Pascal 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.
The company 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.
AstraZeneca beat expectations on revenues but missed on earnings in the third quarter.
Total sales soared by 48 per cent on constant exchange rates to $9.9bn, above the consensus forecast for $9.6bn. 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 $39bn.
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.
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.
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