From failed bids by Pfizer to becoming the UK’s most valuable company, how did AstraZeneca do it?
AstraZeneca, a Cambridge-based pharmaceutical company, pledged to supply two billion doses of a coronavirus vaccine at no profit – the biggest such pledge yet. The company chose to partner with Oxford University to develop and distribute the prospective vaccine, which brings together “Oxford’s world-class expertise in vaccinology and AstraZeneca’s global development, manufacturing and distribution capabilities” according to AstraZeneca’s CEO, Pascal Soriot (source). The announcement is a pivotal point in the global struggle against the virus, which has so far taken over half a million lives and infected around 12 million worldwide. It is also a significant move that could re-build AstraZeneca’s reputation and allow it to secure its position as Britain’s largest listed company (now worth £112bn).
Although now frequently referred as the pioneer in coronavirus vaccine development, AstraZeneca faced numerous struggles in the past. In 2014, the American pharmaceutical giant, Pfizer, attempted to take over AstraZeneca. If successful, the deal would have made Pfizer the biggest drug company in the world. In its final offer, Pfizer wanted to purchase the British drug maker for £55 per share (or about £70 billion in total). The deal was rejected by AstraZeneca, which claimed that Pfizer was undervaluing the company. The deal was also unpopular, with politicians claiming that Pfizer wanted to use the acquisition to move its tax base from the US to low-tax Britain while reducing the R&D in Britain and investing more in the US.
The company’s share price has more than doubled in value, mainly due to its success in oncology
The rejection of the deal worried shareholders, many of whom were concerned with AstraZeneca’s falling share prices and lack of sufficient development. Since then, however, the company’s share price has more than doubled in value, mainly due to its success in oncology. In this context, AstraZeneca’s announcement to be at the forefront of developing a coronavirus vaccine may come as a surprise. Some are questioning whether a company that is specialising in cancer treatment is credible. The company has also been criticised for profiting from people in dire circumstances, which is a general concern in the pharmaceutical company. Therefore, it is not only crucial whether or not the company would be able to develop and distribute the vaccine, but also how it goes about doing so.
So far, AstraZeneca has taken several measures to rebuild the company’s image as a world-leader who truly cares about heath. It pledged to supply half of the doses to low- and middle-income countries in order to combat vaccine nationalism – countries trying to pressure drugmakers to give them the vaccine first. While the company will still most likely prioritise the supply to the UK, the pledge can ensure that at least a significant amount of the vaccines also reach the countries that would normally struggle to afford it. Moreover, the vaccine will be supplied at no profit. The catch here, however, is that this will only be the case while the virus is still classified as a pandemic. Overtime, as the virus becomes endemic (meaning that it will have a constant presence in the area), the company can commercialise the vaccine. This way, the R&D that is happening right now can bring significant profits in the future.
The vaccine will be supplied at no profit
Still, there is a risk that the vaccine will not work. While the researchers are working day and night, no-one truly knows whether the the scientific and financial investment is ever going to pay off or have any practical impact. The testing must be a balance of safety and efficiency, meaning that if the vaccine is to be distributed is has to be safe, but it should get to this stage as soon as possible. From the manufacturing point of view, the uncertainty can be a serious barrier to developing capacity given the financial investment required. Still, it might be a risk worth taking.
Currently, the vaccine is on its way to begin Phase 3 trials with 30,000 volunteers. Only a handful of vaccines ever reach this stage, which means that the vaccine developed by Oxford University may be promising. Other than this vaccine, governments, drug makers, and researchers all around the world are working on over a 100 programs related to coronavirus (Reuters). Even then, the vaccine will most likely not be available until the start of next year. The future of AstraZeneca is at stake here, and so is the future of the world.