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