AstraZeneca’s Covid vaccine will become profitable after the pharmaceutical firm signed its first for-profit deals for the drug, moving it away from the non-profit model it adopted during the pandemic.
The British-Swedish firm, which posted $1.05 billion sales for the vaccine for the three-month period to the end of September, said the drug will remain non-profit for developing countries.
The vaccine helped the company’s total sales jump 50 per cent to $9.9 billion for the three months to September, while revenue for the year to date, excluding the vaccine, increased 32 per cent to $25.4bn.
While the vaccine contributed just $0.01 per share to earnings in the third quarter, the drug will now transition to “modest profitability” as new orders are received.
The drugmaker said the limited profit from the vaccine in the next quarter will offset costs related to the vaccine, which was developed in partnership with Oxford University to prevent serious illness from contracting Covid-19.
Pascal Soriot, chief executive of AstraZeneca, said the company’s scientific leadership continues to provide strong revenue growth and exceptional pipeline delivery.
“Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth,” Mr Soriot said.
“Following accelerated investment in upcoming launches after positive data flow, we expect a solid finish to the year and our earnings guidance is unchanged.”
AstraZeneca committed to selling the vaccine “at cost” during the pandemic when the drug was first released, as part of its agreement with Oxford University, which designed the drug.
Delays in deliveries as well as concerns over a rare blood clotting side effect hampered the company's ability to dominate the vaccine market, with many countries turning to rival vaccines that use mRNA technology, despite AstraZeneca's vaccine being cheaper and easier to transport.
Adam Vettese, analyst at multi-asset investment platform eToro, said AstraZeneca's robust earnings "won’t set shareholders alight as it looks to move forward from the pandemic".
"The challenge for AZ now is where next. It has produced a successful (if at times controversial) vaccine and its forward earnings guidance has remained unchanged, " Mr Vettese said.
"The Covid vaccine itself is providing the firm a small profit, despite the firm previously committing to making the jab a charitable endeavour. While the Covid pandemic is very much still front and centre the firm needs to make sure it continues to progress R&D in other areas to keep pace with its competitors in the future."
On Friday, the company unveiled plans to set up a separate arm for vaccines and antibody treatments that focus on Covid-19.
The pharmaceutical company maintained its earnings guidance for the year as it hailed "strong revenue growth and exceptional pipeline delivery".
The company expects core earnings per share of between $5.05 and $5.40, with total revenue expected to grow by a mid-to-high twenties percentage including the Covid-19 vaccine.
AstraZeneca reported that product sales have risen by a third, with the trend set to continue as it announced eight positive phase three trials, including treatments for liver and prostate cancer.
More than 50 per cent of the world's population has received at least one shot of a Covid-19 vaccine so far, with more than 7.25 billion vaccine doses administered across the globe.
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
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