AstraZeneca Lost Money on Its Covid-19 Vaccine
30 April 2021 - 11:08AM
Dow Jones News
By Jenny Strasburg and Cecilia Butini
LONDON -- AstraZeneca PLC said sales of its Covid-19 vaccine --
which it has promised to sell initially without profit -- haven't
kept up with its costs, resulting in a hit to earnings and a
warning the vaccine effort could continue to affect margins.
The drug giant's booked $275 million in revenue in the first
three months of the year from sales of its Covid-19 vaccine,
developed in partnership with the University of Oxford. The company
delivered 68 million doses globally during the first quarter, far
short of targets.
In Europe, AstraZeneca shortfalls totaling tens of millions of
doses have inflamed political tensions. This week, the European
Union sued the company, alleging failure to satisfy its vaccine
contract with the bloc. AstraZeneca has said it is working to catch
up with supply pledges.
Most of AstraZeneca's vaccine sales revenue in the quarter, $224
million, came from Europe, with $43 million in sales to
emerging-markets countries. The numbers pale in comparison with
multibillion-dollar sales forecasts of other vaccine makers
including Pfizer Inc. and Moderna Inc.
For AstraZeneca, initially at least, the vaccine effort was a
drain on earnings during an otherwise strong quarter. Costs from
the effort shaved 3 cents off its per-share earnings for the
quarter. Earnings per share came in at $1.18 in the quarter, versus
59 cents in the comparable quarter in 2020.
The company said it cost money to provide "equitable supply" of
the vaccine at no profit, resulting in a "significant impact" on
overall profit margins. Gross profit margins declined 3 percentage
points in the quarter, to 74.6%.
"These variations in gross margin performance between quarters
can be expected to continue," AstraZeneca said.
The British-Swedish drugmaker also said Friday it plans to apply
to the U.S. Food and Drug Administration for authorization for the
vaccine in coming weeks.
AstraZeneca's U.S. rollout plans have faced prolonged delays,
after early estimates that the shot might be available in late
2020. The drugmaker said in March this year it would apply for FDA
review by mid-April. The Wall Street Journal reported Thursday that
AstraZeneca had told U.S. officials in recent days it might need
until mid-May to finish its application.
The company has struggled to pull together the full data
required for the report, which includes efficacy and safety
statistics from almost four months of vaccinations in the U.K.,
plus data from large-scale U.S. and U.K. human trials, The Journal
reported.
Overall first-quarter profit was $1.56 billion, roughly double a
year ago, on increased revenue of $7.3 billion. A key benchmark,
product sales, increased 15% on strong performance of core cancer
drugs and new products in the company's pipeline.
Last year, the company doubled its full-year profit and struck a
$39 billion deal to buy Boston-based Alexion Pharmaceuticals Inc.,
a maker of rare-disease drugs and therapies. But public attention
has been heavily focused on the Covid-19 vaccine AstraZeneca
brought to market in January, when the first mass vaccinations
using the shot took place in the U.K. It is now in use in more than
100 countries.
The vaccine effort has faced a series of hurdles, from confusing
clinical-trial results and production delays to questions about the
shot's precise efficacy and rare blood-clotting problems among a
small percentage of people post-vaccination.
Still, it is a major focus of global hopes for curbing the
pandemic, especially among developing countries with less access to
more expensive vaccines bought up by wealthier countries.
AstraZeneca said the company, together with the Serum Institute of
India, has delivered more than 48 million doses to a global funding
initiative known as Covax focused on supplying shots to
less-wealthy countries.
AstraZeneca reiterated its full-year outlook for total revenue
increasing by a low-teens percentage, and core earnings per share
rising to $5.00 from $4.00, all at constant exchange rates. The
guidance doesn't incorporate revenue or profit impact from Covid-19
vaccine sales or the proposed Alexion acquisition.
Write to Jenny Strasburg at jenny.strasburg@wsj.com
(END) Dow Jones Newswires
April 30, 2021 04:53 ET (08:53 GMT)
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