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AstraZeneca to start taking profit from COVID vaccine after $1bn quarterly sales

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LONDON, UNITED KINGDOM - 2021/06/28: Vials containing Oxford/AstraZeneca Covid-19 vaccine are seen at a vaccination centre in London. (Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images)
AstraZeneca's vaccine will remain not-for-profit for low-income nations, but it will move to earning modest profits from new orders from richer countries. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images

AstraZeneca (AZN.L) posted quarterly sales of more than $1bn (£750m) for its COVID-19 vaccine on Friday, as it plans to move from its not-for-profit basis.

The pharmaceutical firm, which first produced the coronavirus jab with Oxford University at cost during the pandemic, will now look to start turning a profit from it to help improve margins and offset costs from its antibody treatment.

It said it would “progressively transition the vaccine to modest profitability as new orders are received” from the fourth quarter. But it did not change its earnings forecast.

Its vaccine will remain not-for-profit for low-income nations, but will move to earning modest profits from new orders from richer countries.

Demand for COVID vaccines bumped AstraZeneca’s revenues for the jab to $1.05bn in the period, compared with $894m in the previous three-month period and $275m in the first quarter this year.

Overall revenues for the quarter came in at $9.9bn, a rise of 50%, while revenues for the year to date increased by a third.

Chart: Yahoo Finance
Chart: Yahoo Finance

However, core earnings per share of $1.08, fell short of analyst forecasts of $1.25, sending the share price as much as 4% lower in London.

“In general, AstraZeneca continues to recognise the heightened risks and uncertainties from the effects of COVID-19,” the company said. “Variations in performance between quarters can be expected to continue.”

Analysts at Intron Health pointed to the earnings per share miss for the reason behind the negative response, as well as slow growth in China and lower-than-expected revenues from its cancer drug Tagrisso.

“Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth,” chief executive Pascal 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.”

Read more: European stock markets mixed as UK job ads hit record

Only a few days ago the drugmaker confirmed that it will create a separate business division for vaccines and antibody therapies. It said the reorganisation would bring together people who had previously been based in different parts of the business.

It follows its $39bn takeover of US rare disease specialist Alexion earlier this year. AstraZeneca said Alexion had added $1.3bn in revenue since the deal was completed in July through rare disease treatments.

Adam Vettese, analyst at multi-asset investment platform eToro, said: "COVID vaccine maker AstraZeneca has reported a reasonably robust set of numbers this morning, but won’t set shareholders alight as it looks to move forward from the pandemic.

“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.”

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