By Pushkala Aripaka and Ludwig Burger
(Reuters) – AstraZeneca said it would begin to earn a modest profit from its coronavirus vaccine as the world learns to live with the virus and the drugmaker is in talks with several countries about new orders for delivery next year.
AstraZeneca made a commitment to sell the shot developed with Oxford University at cost during the pandemic and in a press conference on Friday said low-income nations would continue to receive the vaccine on a no-profit basis, while a post-pandemic commercial approach would apply to other new orders even as infections in Europe rise again.
The Anglo-Swedish company’s third-quarter results showed the vaccine contributed one cent to core earnings per share of $1.08, a rise of 14%. Total product sales jumped 49% to $9.74 billion, as its vaccine sales topped $1 billion.
“We started this project to help … but we also said that at some stage in the future, we will transition to commercial orders,” Chief Executive Pascal Soriot told journalists.
“It will never be high priced. Because we want the vaccine to remain affordable to everybody around the world,” he added.
Soriot, a French national, said the virus was becoming endemic, a term for a background level of infections that is part of everyday life.
Talks about new orders with undisclosed countries were underway, mainly for delivery next year, with some prospective customers focusing on booster shots, Soriot said.
AstraZeneca unveiled plans this week to set up a separate unit to focus on its coronavirus efforts and other respiratory infections. It said on Friday the unit would independently manage production and distribution.
PROFIT FALLS SHORT
Shares of the FTSE 100 drugmaker were down 3.4% at about 91.22 pounds at 1209 GMT as overall third-quarter profit fell short of analysts’ expectations.
There were strong performances of core products like kidney disease treatment Farxiga and established asthma drug Symbicort, and from the addition of rare-disease specialist Alexion from July 21, thanks to last year’s $39 billion takeover deal.
However, integration costs related to that deal ate into profits, as did a $1.2 billion writedown for an experimental kidney disease drug AstraZeneca acquired in 2012, with overall expenses also rising on investments into the drug pipeline.
Top selling drug Tagrisso for lung cancer also posted lower-than-expected growth in sales due to price cuts in China.
AstraZeneca said a profit boost from the vaccine in the fourth quarter would make up for costs related to its antibody cocktail for preventing and treating COVID-19, as it stuck with its earnings forecast for the year.
Liberum analyst Alistair Campbell said in a note the higher expenses would raise some concerns but the reiteration of guidance was reassuring.
AstraZeneca’s vaccine has had a tumultuous journey, with its not-for-profit strategy and challenges around efficacy data, supplies and links to rare blood clots, fuelling speculation on whether it would want to keep the business in the long term.
The drugmaker and its Indian manufacturing partner, Serum Institute, have supplied more than 1.5 billion vaccine doses as of the end of September, compared with more than 2 billion from the rival alliance of Pfizer and BioNTech.
Pfizer this month forecast 2021 and 2022 sales from its COVID-19 vaccine of at least $65 billion overall, topping estimates. However, Moderna slashed its 2021 sales outlook for its shot by as much as $5 billion, on production hiccups.
Including sales from the vaccine in the fourth quarter, AstraZeneca now expects 2021 revenues to grow by a mid-to-high twenties percentage. It previously expected sales to grow by a low-twenties percentage excluding the shot.
Analysts on average were expecting third-quarter profit of $1.28 per share on sales of $9.4 billion, according to Refinitiv IBES data.
(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger in Frankfurt; Editing by Elaine Hardcastle)