Analysis: AstraZeneca vaccine more than a break-even proposition

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Good afternoon everyone,

With the release of  AstraZeneca’s third-quarter report,  we learned that the UK-based company with operations in northern Delaware is beginning to earn a profit from its vaccine.

The company showed a loss for the quarter due to the costs of completing a recent acquisition of a rare disease specialist. It contributed to a more than 6% drop in its stock price. However, shares are still trading near their five-year high.

As you might remember, AZ, initially offered its vaccine on a break-even basis. That began to change in the third quarter.

The earnings report was good news for Delaware. Recent reports indicate that AZ employs  1,500 in administrative, manufacturing, and logistics operations in New Castle County.

In what might be seen as a hopeful sign that the worst of the Covid-19 pandemic has passed in some countries, AZ is now shooting for a modest profit as it begins to sell vaccines at a higher price to more affluent nations.

CEO Pascal Soriot said the company will still offer vaccines on a break-even basis to poorer nations and that selling at a profit to more affluent countries was always the plan.

Soriot  credits the AZ vaccine with saving one million lives- no small achievement.

AstraZeneca and other companies will also profit from treatments that are reducing the rate of hospitalizations and deaths for those who contract the virus.

Long-term, AstraZeneca can make a profit from vaccines without breaking the bank for governments or consumers.  The cost of each dose is reportedly $5  compared to the Cadillac-Mercedes prices of $20 to $35 for Moderna and Pfizer. The per-dose cost of the J&J vaccine is also a good deal at about $10.

AstraZeneca’s vaccine, like J&J’s offering,  is not quite as effective as Moderna and Pfizer All vaccines do an excellent job in the all-important task of keeping people out of overburdened and understaffed hospitals.

The AZ vaccine has never been approved in the U.S. following a snafu with patient trials. At this point, there seems to be little need to do so,  given the ample supplies of approved vaccines.

The lack of an FDA OK  comes despite the government forking over $1 billion in research costs for the AZ vaccine. Moderna also received federal funds, but was allowed to pocket the profits.

Long-term, the government’s investment will aid in dealing with a worldwide pandemic.

As  Covid remains a threat,  thanks in part to vaccine reluctance,  it would be good to have a lower-cost alternative.

Not that anyone has to worry about the finances of the other three companies with Covid vaccines that are approved in the U.S. Profits are pouring in for both Pfizer and Moderna – less so for J&J.

Longer-term, some are predicting another golden age for pharma,  due in part to vaccines, once considered a marginally profitable side of the business. Driving this trend will be the growing realization that the cost to the economy from Covid-19 remains high.

Delaware should benefit from better days for the industry,  given the growth of bioscience.

The largely ignored life sciences growth in the state comes after AstraZeneca a decade ago ended research and slashed employment in Delaware as blockbuster drugs lost patent protection.

Earlier losses in Delaware have been replaced by the spectacular growth at  Incyte Corp., strength in medical technology equipment and processes (Siemens, Agilent, etc.), promising start-ups, and the opening of a federally sponsored manufacturing research effort at the University of Delaware STAR campus (NIIMBL)  – Doug Rainey, chief content officer.

 

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