AstraZeneca Misplaced Cash on Its Covid-19 Vaccine

LONDON-

AstraZeneca

AZN -1.36%

PLC said the sale of its Covid-19 vaccine, which was initially promised to sell for no profit, failed to keep up with costs, causing a slump in earnings and a warning that vaccine efforts could continue to hurt margins.

The drug giant generated $ 275 million in revenue in the first three months of the year from sales of its Covid-19 vaccine, which was developed in partnership with the University of Oxford. The company shipped 68 million cans worldwide in the first quarter, well below target.

In Europe, tens of millions of cans of AstraZeneca deficits have sparked political tension. This week has the The European Union sued the companyon the charge of not having fulfilled the vaccination contract with the block. AstraZeneca has announced that it will meet the delivery commitments.

Most of AstraZeneca’s vaccine sales for the quarter, $ 224 million, were in Europe, with $ 43 million in sales in emerging markets. The numbers pale in comparison to multi-billion dollar sales projections from other vaccine manufacturers, including

Pfizer Inc.

and

Modern Inc.

More about the AstraZeneca vaccine

At least for AstraZeneca, vaccine expenses were initially a drag on earnings for an otherwise strong quarter. Stocks rose 3% in early trading due to better-than-expected sales and profits. The cost of vaccination cut earnings per share for the quarter by 3 cents, which was $ 1.18, down from 59 cents for the comparable quarter of 2020.

The company and its manufacturing partners have shipped 300 million doses of vaccine worldwide to date, a year after AstraZeneca agreed to join Oxford’s efforts to cause a pandemic worldwide.

The company said it was costly to provide an “equitable supply” of the vaccine for no profit, which has a significant impact on overall profit margins. Core gross profit margins decreased 3 percentage points to 74.6% for the quarter.

“It is expected that these gross margin fluctuations will continue between quarters,” said AstraZeneca. On a call with reporters, executives said that as supplies continue, fluctuations will stabilize and the company expects to break even over time.

Board chairman Pascal Soriot said that despite disappointments and criticism, AstraZeneca has no regrets about its efforts to get a Covid-19 vaccine or its non-profit approach with Oxford. He pointed up India grappling with rising infections and deathswhere the AstraZeneca vaccine is the dominant shot available.

Dr. Soriot said more than a hundred Covid-19 vaccines were developed in the past year and only a handful made it to market. “Where are all these vaccines? You are nowhere. “He said that despite the major supply shortages in Europe, AstraZeneca will have delivered 50 million cans to the block between February and late April.

The Anglo-Swedish drugmaker said Friday it plans to apply to the U.S. Food and Drug Administration for approval of the vaccine in the coming weeks.

AstraZeneca’s US rollout plans have experienced lengthy delays after initial estimates that the shot could be available in late 2020. The drug maker announced in March this year that it would file for an FDA review by mid-April. The Wall Street Journal reported Thursday that AstraZeneca had advised US officials in recent days that it could need until mid-May to finish the application.

Europe’s leading medicines agency has approved AstraZeneca’s vaccine after it was exposed in several countries over blood clot concerns.

The company has worked hard to bring together the complete data required for the report, including efficacy and safety statistics from nearly four months of vaccinations in the UK, as well as data from large-scale US and UK human studies, The Journal reported.

Total earnings for the first quarter exceeded analysts’ expectations at $ 1.56 billion, roughly double last year, with sales up $ 7.3 billion. A key metric, product sales, rose 15% due to the strong performance of cancer drugs and new products in the company’s pipeline.

Last year, the company doubled its full year earnings and signed a $ 39 billion purchase agreement based in Boston

Alexion Pharmaceuticals Inc.,

a manufacturer of Drugs and therapies for rare diseases. However, public attention has been drawn heavily to the Covid-19 vaccine AstraZeneca, which was launched in January when the first mass vaccination with the shot took place in the UK. It is currently used in more than 100 countries.

The vaccination effort has faced a number of hurdles, from confusing clinical trial results and production delays to questions about the exact effectiveness of the shot and rare blood clotting problems in a small percentage of people after vaccination.

Still, it is a major focus of global hopes to contain the pandemic, especially in developing countries that have less access to more expensive vaccines bought by richer countries. According to AstraZeneca, the company has partnered with the Serum Institute of India to deliver more than 48 million cans to a global funding initiative called Covax, which focuses on delivering shots to less affluent countries.

AstraZeneca reiterated its full year outlook for a low percentage increase in total revenue for teens and an increase in core earnings per share from $ 4.00 to $ 4.75-5.00 in constant currencies. The guidelines do not include any revenue or profit impact from the sale of Covid-19 vaccines or the proposed acquisition of Alexion.

Write to Jenny Strasburg at jenny.strasburg@wsj.com

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