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AstraZeneca to begin making ‘modest’ profit from Covid-19 vaccine as virus becomes ‘endemic’

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AstraZeneca will begin to make a “modest” profit from Covid-19 vaccine sales as the virus becomes “endemic”, but will continue to supply it at cost to low-income countries.

The Cambridge-based biopharmaceutical reported a decline in its profit margins in its latest financial results, which was largely due to its commitment to the “equitable supply” of the vaccine.

Pascal Soriot, chief executive officer of AstraZeneca
Pascal Soriot, chief executive officer of AstraZeneca

Its gross profit for the third quarter was 68.8 per cent - down 11 percentage points. But it was the company’s most successful quarter yet in terms of revenue, with $9.87billion (£7.37billion) recorded, up 48 per cent, including the contribution from Covid-19 vaccines.

Total revenue for the year are up 32 per cent (28 per cent at a constant exchange rate) to £25,406m.

Explaining the change of approach on vaccine sales, CEO Pascal Soriot said: “We started this project to help, but we also said that at some stage in the future, we will transition to commercial orders.

“It will never be high priced because we want the vaccine to remain affordable to everybody around the world."

Illustrative vaccine vials from AstraZeneca / Oxford University. Image: AstraZeneca
Illustrative vaccine vials from AstraZeneca / Oxford University. Image: AstraZeneca

AstraZeneca’s agreement with Oxford University, which created the vaccine, required it to be provided at no profit during the course of the pandemic.

“I absolutely don’t regret it,” Mr Soriot said of the deal. “We are proud as a company of the impact we have had - we've saved millions of hospitalisations and we estimate about a million lives.”

Pfizer and Moderna have been making profits from their vaccines.

AstraZeneca plans to set up a separate arm for vaccines and antibody treatments focused on Covid-19. Its revenues in the third quarter included more than one billion dollars (£780m) worth of Covid-19 vaccine sales and in the final quarter of the year it expects these to be a “blend of the original pandemic agreements and new orders, with the large majority coming from pandemic agreements”.

It said: “The limited profit contribution from the vaccine in Q4 2021 is expected to offset costs relating to the company’s long acting antibody combination (AZD7442).”

The company has been buoyed by a series of positive trial results and is also making progress on the integration of rare disease specialist Alexion, which it acquired for $39bn in July.

A researcher working on the Oxford/AstraZeneca vaccine. Picture: John Cairns/University of Oxford/PA
A researcher working on the Oxford/AstraZeneca vaccine. Picture: John Cairns/University of Oxford/PA

Announcing the results, Mr Soriot said: “AstraZeneca’s scientific leadership continues to provide strong revenue growth and exceptional pipeline delivery, with eight positive late-stage readouts across seven medicines since June, including our long acting antibody combination showing promise in both prevention and treatment of Covid-19. The addition of Alexion furthers our commitment to bring transformative therapies to patients around the world, and I am proud of our colleagues’ ongoing dedication and focus.

“Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth. Following accelerated investment in upcoming launches after positive data flow, we expect a solid finish to the year and our earnings guidance is unchanged.”

Meanwhile, at COP26, the Prince of Wales announced AstraZeneca as one of only seven holders worldwide of the Terra Carter seal in recognition of its verified science-based net zero targets. It was the only pharmaceutical company on the list.

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