Ev­ery cloud

How a vac­cine could trans­form As­traZeneca and other pharma giants Hannah Ut­t­ley

The Daily Telegraph - Business - - Front Page -

As­traZeneca is un­der grow­ing pres­sure to pub­lish pos­i­tive data re­lated to its coro­n­avirus vac­cine af­ter global mar­kets ral­lied on re­ports that sci­en­tists had made a break­through in its de­vel­op­ment.

Since join­ing forces with the Univer­sity of Ox­ford in April, the Bri­tish drugs gi­ant has re­leased a flurry of en­cour­ag­ing an­nounce­ments re­lat­ing to the vac­cine.

Most re­cently it re­vealed am­bi­tions to sup­ply two bil­lion doses of the jab as early as Septem­ber, of which half have been pledged to low and mid­dlein­come coun­tries.

The po­ten­tial im­mu­ni­sa­tion is be­ing de­vel­oped by a team of sci­en­tists led by Ox­ford Univer­sity pro­fes­sors Adrian Hill and Sarah Gil­bert and has been touted as lead­ing the pack in the race to find a vac­cine to fight the virus. As­traZeneca will li­cense and dis­trib­ute the vac­cine, called AZD1222, on the univer­sity’s be­half.

All eyes are now on the FTSE 100 firm and the team of sci­en­tists af­ter it emerged that the jab trig­gers an im­mune re­sponse to the virus. The full find­ings from the Phase I clin­i­cal trial are set to be pub­lished in The Lancet med­i­cal jour­nal on Mon­day.

If suc­cess­ful, the vac­cine would be a ma­jor coup for As­traZeneca’s chief ex­ec­u­tive Pas­cal So­riot, who has al­ready won plau­dits for drag­ging the firm out of the dol­drums and trans­form­ing it into a global pow­er­house for sci­en­tific re­search and de­vel­op­ment. As­traZeneca has com­mit­ted to en­sur­ing fair sup­ply of the po­ten­tial vac­cine around the world at break-even dur­ing the pan­demic.

But this does not pre­vent the group from turn­ing this into a com­mer­cial op­por­tu­nity fur­ther down the line, ex­perts say. Michael Breen, di­rec­tor of in­fec­tious diseases at re­search firm Glob­alData, says if As­traZeneca can prove the ef­fi­cacy of its im­mu­ni­sa­tion, it could be called upon by gov­ern­ments and pub­lic health au­thor­i­ties in any fu­ture pan­demics.

“This could es­tab­lish As­traZeneca as a com­pany that’s a go-to for fu­ture out­breaks,” he says. “These com­pa­nies could part­ner with gov­ern­ments or the

World Health Or­gan­i­sa­tion and demon­strate that they have some­thing that has proven to ad­dress a pan­demic that lit­er­ally crip­pled the world.

“A firm like As­traZeneca could take a nom­i­nal fee and work with them to lay the ground­work for a re­sponse plat­form so that when fu­ture out­breaks oc­cur it will have the ex­per­tise to rapidly de­velop a so­lu­tion.”

An­a­lysts at Jef­feries be­lieve As­traZeneca could ben­e­fit fi­nan­cially from the vac­cine de­pend­ing on pa­tients’ du­ra­tion of im­mu­nity to the virus and in the event of fur­ther waves of the out­break.

The in­vest­ment bank es­ti­mates that As­traZeneca could pocket $1.5bn (£1.2bn) in re­cur­ring sales from the jab, as­sum­ing 250 mil­lion doses an­nu­ally are ad­min­is­tered to de­vel­op­ing coun­tries at about $6 per dose, com­pared with the typ­i­cal $12 cost of a flu jab.

An­drew Baum, a health­care an­a­lyst at Citi, be­lieves that any fu­ture fi­nan­cial re­turns on a suc­cess­ful vac­cine is un­likely to move the dial for a be­he­moth such as As­traZeneca, which is both the UK’s big­gest drugs firm and

the most valu­able com­pany on the FTSE with a £117bn mar­ket cap.

He says the big­gest ben­e­fit is one that will stand it in good stead with global pol­i­cy­mak­ers in the fu­ture.

“The ma­jor re­turn is po­lit­i­cal cap­i­tal rather than fi­nan­cial cap­i­tal,” Baum says. “Pas­cal has played this card par­tic­u­larly well, be­cause not only has he very early on stated that he would pro­vide the vac­cine at cost, but he went be­yond that and said ‘we want as many peo­ple to ben­e­fit as quickly as pos­si­ble’.”

To that end he sub-con­tracted pro­duc­tion to de­vel­op­ing world coun­tries so that they can also ben­e­fit and re­duce their bur­den of dis­ease.

“Frankly, it’s been a text­book ex­am­ple of op­ti­mal pub­lic re­la­tions and gov­ern­ment af­fairs strat­egy, and that’s re­ally im­por­tant.” As­traZeneca is fight­ing it out with global play­ers

in­clud­ing Sanofi and Glax­oSmithK­line, as well as smaller biotech firms such as Moderna to be the first to de­liver the world’s most ef­fec­tive vac­cine for coro­n­avirus.

Baum says that while As­traZeneca is not one of the ma­jor play­ers in vac­cines – a mar­ket that is dom­i­nated by GSK, Sanofi, Merck and Pfizer – So­riot could choose to shift the firm’s fo­cus if it proves com­mer­cially ben­e­fi­cial.

“Pas­cal is very prag­matic, and he can change his strat­egy just on the flip of a dime, as in­deed they just did with Covid,” Baum says.

“As­traZeneca went from nowhere with that to hav­ing the lead can­di­date vac­cine, and that’s be­cause Pas­cal made the shrewd bet that the up­side would clearly out­weigh the down­side.

“If he be­lieves that gov­ern­ments are go­ing to play a much more sig­nif­i­cant role in the fu­ture of the in­dus­try in terms of set­ting up in­cen­tives or cap­i­tal al­lo­ca­tion [for vac­cine pro­duc­tion], he may deem sud­denly it’s ac­tu­ally very im­por­tant for As­traZeneca to be part of that process.

“I wouldn’t rule that out as a pos­si­bil­ity.”

‘The ma­jor re­turn is po­lit­i­cal cap­i­tal rather than fi­nan­cial. Pas­cal has played this card par­tic­u­larly well’

‘As­traZeneca went from nowhere with Covid re­search to hav­ing the lead can­di­date vac­cine’

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