AstraZeneca's non-profit vaccine is, for now, costing them money
For the first earnings report of the year, AstraZeneca invented a new metric: the profit they’d have if you didn’t count their Covid-19 vaccine costs.
When AstraZeneca announced last year that they would develop Oxford’s Covid-19 candidate, they said they would sell it on a not-for-profit basis during the pandemic. The terms fulfilled the vaccine’s academic inventors’ desire to see their shot deployed cheaply around the world, while also allowing the drugmaker to do some good and, potentially, secure a massive PR coup.
The PR coup they wanted would turn into a PR nightmare over the last 8 months, as the Swedish-British pharma presented what experts described as mottled data and missed manufacturing targets to the point the EU filed a lawsuit. Concerns also arose over a rare but serious side effect associated with the shot.
Now, it looks like the vaccine is costing AstraZeneca money too. Although the company did not break down precisely what they spent on their vaccine in their Q1 earnings, they said the costs were the first of three factors that cut their gross profit by 3%. The other two factors were reduced reimbursements from China and changes in their profit-sharing agreement with Merck on the blockbuster cancer drug Lynparza.
“If you exclude the impact of our Covid-19 vaccine, our revenue grew by 7%,” CEO Pascal Soriot told investors on a conference call. “There will be ups and downs — small ones quarter to quarter — with this vaccine.”
AstraZeneca expects their cost and revenue for the inoculation will eventually even out, but at the moment, the company has faced significant development, manufacturing and deployment costs. Going forward, they will also accrue costs for tracking the vaccine’s real-world safety and effectiveness. At the same time, with the company facing manufacturing delays in Europe and regulatory delays in the US, they remain significantly behind schedule in global sales of the vaccine.
The company so far has sold 68 million doses, they disclosed in filings, for $275 million in revenue. The figure confirms earlier reporting that the company would sell the vaccine for about $4 to $6 per dose.
Although 68 million doses were distributed directly by AstraZeneca, the company’s vaccine has already had a larger impact, with its partners around the globe distributing 300 million doses, Soriot said. That includes the 48 million doses that India’s Serum Institute delivered to the COVAX initiative for low- and middle-income countries — virtually the entire supply of Covid-19 vaccine the initiative has received thus far.
The new disclosures also make clear just how much AstraZeneca has foregone in electing to sell their vaccine on a non-profit basis. Moderna and Pfizer, by contrast, believe they will make $18.4 billion and $15 billion this year through their Covid-19 vaccines, despite plans to produce fewer overall doses.
Outside of vaccine news, AstraZeneca also unveiled a small handful of business and pipeline updates. Most notably, they will pay around $3 billion over the next three years for the last 45% of stock in Acerta, the cancer biotech they acquired in 2015 for $2.5 billion upfront. The key milestones in that deal hinged on the progress of the BTK inhibitor Calquence. The last option was triggered upon its November approval in the European Union.
Additionally the company slashed a couple of early stage programs, including the asthma candidate AZD8154 and MEDI2228, an antibody drug conjugate for multiple myeloma. The latter change reflects a growing shift in the multiple myeloma field, as new and effective bispecific antibodies and cell therapies come on the market.
