AZ reveals doubts over future of vaccine unit
The pharmaceutical giant is considering a shake-up following political furore around its Covid jab
Astrazeneca has raised doubts about the future of its vaccine business after damaging clashes with the EU and global regulators over its non-profit Covid jab. It is considering a shake-up that could turn the Covid vaccine unit into a profitmaking division or lead to a partnership or a spin-off. It is the first time it has confirmed it is reviewing the business. Ruud Dobber, head of AZ’S biopharmaceuticals unit, insisted the company had no regrets about developing the Covid jab.
ASTRAZENECA has raised doubts about the future of its vaccine business after damaging clashes with the European Union and regulators around the world over its non-profit Covid jab.
The company is considering a shakeup which could turn the coronavirus vaccine unit into a profitmaking division, lead to a partnership with another player in the industry or culminate in a spin-off, sources said.
It is the first time the FTSE 100 pharma giant has publicly confirmed that it is reviewing the future of the business.
Ruud Dobber, head of Astra’s biopharmaceuticals unit, told Reuters: “We are exploring different options. Before year-end, we will have more clarity.
“Is the vaccine businesses a sustainable business for Astrazeneca for the next five or 10 years? That big strategic question is under discussion.”
Manufacturing issues and slow uptake of the Oxford/astrazeneca jab, fuelled by misleading reports and politically motivated rumours surrounding its safety and efficacy, have hampered the pharmaceutical titan’s efforts to become the global supplier of an affordable vaccine.
But Mr Dobber insisted that Astra has no regrets about developing the Covid jab. The Cambridge-based company has delivered more than a billion doses of the jab, which it developed in partnership with Oxford University.
Asked if Astra should have done anything differently, he said: “I personally don’t have any regret that we moved into this quite substantial project.”
Pascal Soriot, Astrazeneca’s chief executive, said he was proud of the vaccine but admitted the company had hoped to deliver more.
In contrast to peers such as Pfizer and Moderna, which have reaped huge financial rewards from their vaccine development programmes, Astra committed to selling its jab at no profit and has made it widely available to the developing world.
The British company booked $900m (£644m) of sales from its vaccine in the second quarter of the year, far below the $7.8bn reported by Pfizer.
Astra’s vaccine was subjected to months of criticism on the Continent and further afield because of early manufacturing delays and concerns it could
‘I personally do not have any regret that we moved into this quite substantial project’
cause blood clots in a vanishingly small number of cases. A study submitted to The Lancet medical journal this week found that the Astra jab has a similar safety profile to Pfizer’s.
It came as Astrazeneca reported a 23pc rise in revenue to $15.5bn in the first half of its financial year, driven by strong sales from its latest cancer treatments and kidney and diabetes drug Farxiga.
Pre-tax profit rose by a quarter to $2.4bn. The company’s profit margins, however, were squeezed because of its efforts to develop and rollout the vaccine at cost.
Shares edged up 0.13pc to £82.77, valuing the company at £128bn.
‘The European leaders who trashed the Astrazeneca vaccine now have blood on their hands’
In the darkest days of the coronavirus crisis, Emmanuel Macron took to the media circuit with a scathing attack on the world’s cheapest Covid vaccine – the only one to be produced at cost.
Britain’s pioneering jab, developed by Oxford University and manufactured by Astrazeneca, was “quasi-ineffective” on older people, the French president said. “The real problem on Astrazeneca is that it doesn’t work the way we were expecting it to,” he added.
Weeks later, when a study suggested there was a tiny chance that patients could develop blood clots, the vaccine’s use was curtailed across Europe. In America, it was never approved at all.
The damage caused by Europe’s assault on Astrazeneca is now becoming clear. The company’s decision to make its jab without taking a profit has squeezed margins. The company is now weighing up whether it wants a future in vaccines at all.
Meanwhile, Astrazeneca’s biggest rival Pfizer is hiking forecasts, despite a paper submitted to The Lancet this week suggesting that the two vaccines have a similar safety profile.
In Britain, ministers have reacted with blind fury to what they see as a European Union campaign motivated chiefly by envy at British scientific expertise and animosity over Brexit. “The European leaders who trashed the Astrazeneca vaccine now have blood on their hands,” a Government official told Politico. “When the history books are written, they’ll say these people are directly responsible for the deaths of thousands in developing countries.”
After all, Astrazeneca’s vaccine has been the only one available to many people in poorer parts of the world.
Astrazeneca’s leading role in getting vaccines to the poorer countries is one that few would have predicted. But insiders have said there was no doubt in chief executive Pascal Soriot’s mind that he wanted to help when the University of Oxford asked to team up with the company last year. “Pascal said, ‘look, this is something that we could do for the world, it would be terrific’,” vaccine tsar Sir John Bell recalls.
There was never any guarantee it would work. In March 2020, Anthony Fauci, head of the US National Institutes of Allergy and Infectious Disease, predicted it would take at least 18 months to create a vaccine.
Ultimately, less than nine months after Fauci’s comments, Pfizer and Biontech’s jab became the first vaccine to get approval from the UK regulator. Weeks later, Astrazeneca and Oxford’s vaccine received the green light.
But, where the former was roundly cheered and is now one of the most widely used in higher income countries, the Astrazeneca jab remains marred by early criticism. At the start of the year, discussion focused on its potential link to blood clots. However, a paper this week suggested Astrazeneca-jabbed patients develop blood clots at a “similar rate” to those who received the Pfizer vaccine.
“I think that paper looks pretty good,” says Sir John. “We haven’t seen a big problem with blood clots in Latin America, in south-east Asia, and we haven’t seen a lot of blood clots in Africa. There is an interesting question over whether there’s a differential liability to blood clots in Northern European caucasian people in Norway, where they first appeared, as compared to everyone else.”
It is not the only issue to have weighed on the company. For months, Astrazeneca found itself at the centre of a row over supply rates, which ultimately became the subject of a lawsuit from Brussels after it struggled to meet deliveries. A judge later ruled that it did not need to speed up deliveries to the bloc.
Such turmoil has not escaped the notice of shareholders. “The bottom line is Astrazeneca makes no money from this. Investors are frustrated that it’s a distraction of their own making,” says Alistair Campbell, at Liberum.
Meanwhile, US company Pfizer’s vaccine has gone from strength to strength. Made using a pioneering MRNA technique – where genetic information is injected into the arm, teaching cells how to make antibodies – they are being sold for around
$20 (£14) per dose compared to the $4 typically charged for an Astra jab.
Pfizer has garnered a reputation for better safety, higher effectiveness and fewer side-effects than Astra, and the American business is reaping the rewards. This week, the company increased its projected annual revenues from the vaccine from $26bn to $33.5bn.
Meanwhile, the controversies at Astra have led to question marks over its future in vaccines. Yesterday, Ruud Dobber, head of Astra’s biopharma unit, told Reuters that the business was “exploring different options” for its work in the field.
As it stands, Campbell says the business is currently “one vaccine, it’s one project, I don’t think it’s something they can spin off ”. He added Astra seems to have little appetite to push further into vaccines, with the company instead telling analysts that its focus was on the huge task of integrating Alexion as part of its $39bn takeover.
In truth, there is much still to do on Covid-19. Only 13pc of the world are fully vaccinated against the virus. In developing countries, the Oxford/ Astrazeneca vaccine will remain invaluable, and booster shots could soon be needed. But the past 18 months may have left a bitter taste for many within Astrazeneca.
Developing jabs for all may be a “terrific thing” for humanity, but it is one which has proved an uphill battle for Britain’s champion.