You are here: Home » Companies » News
Business Standard

Astra moves to profit from Covid-19 vaccine as earnings fall short

The company will 'progressively' transition to vaccine profitability from the fourth quarter, Astra said

Astra | Coronavirus Vaccine

Suzi Ring | Bloomberg 

AstraZeneca wasn't the obvious choice to partner up with Oxford when scientists there started developing a coronavirus shot. Photographer: Mikael Sjoberg/Bloomberg
Representative Image

AstraZeneca Plc said it’s moving to profit from the Covid-19 vaccine it developed with the University of Oxford as new orders are received after supplying the shot at cost during the pandemic.

The company will “progressively” transition to vaccine profitability from the fourth quarter, said in its quarterly earnings report Friday. The gains will offset costs related to its Covid antibody cocktail, said. The shares dropped after earnings in the quarter missed analysts’ estimates.

Throughout the Covid crisis, has said it wouldn’t take a profit from the vaccine “during the pandemic.” The company is making the move even as infection rates rise in many regions, including Europe.

Astra and Oxford created one of the first coronavirus vaccines, receiving authorization from the U. K. in December. The company has looked on as Pfizer Inc. and Moderna Inc., which rolled out successful vaccines around the same time, have made billions of dollars in sales from their shots.

Astra has said it will only take a profit from wealthier nations and continue to provide the vaccine to low- and- middle-income countries at cost for far longer.

Pfizer has said the shot it developed with BioNTech SE -- the best-selling pharmaceutical product of all time in a given year -- is expected to bring in $36 billion in sales in 2021. Astra’s Covid vaccine revenues were $1.05 billion in the quarter.

“The company is now expecting to progressively transition the vaccine to modest profitability as new orders are received,” Astra said in a statement. Covid vaccine sales in the fourth quarter are expected to be a “blend of the original pandemic agreements and new orders, with the large majority coming from pandemic agreements.”

What Bloomberg Intelligence Says:

A messy quarter, with a 13% EPS miss but reiterated guidance, suggests AstraZeneca has a cost-phasing issue, and consequently needs to beat 4Q consensus even to make the bottom end of its reiterated range. A slight revenue miss ex-Covid-19 vaccine was driven mainly by Tagrisso, but focus will be on on whether the EPS miss is down to a lack of appreciation for the newly-incorporated Alexion cost base or frontloading of launch costs. A reiteration of guidance suggests the latter, though Astra has chosen to incorporate some first-time vaccine profit into guidance, but not amend it.

-- Sam Fazeli, BI pharma analyst

Astra’s Confusing 3Q Leaves It Needing Strong 4Q: React

The development comes after the company said this week it is creating a new unit to house its Covid assets, raising questions over whether it would look to push further into the vaccines space or spin off the business at some point. Astra only had one nasal flu spray before the pandemic.

Astra reiterated its outlook for the year following the acquisition of rare-disease specialist Alexion Pharmaceuticals Inc.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, November 12 2021. 15:21 IST