38 1GM Monday August 3 2020 | the times
Business
GETTY IMAGESThe world is crying out for a corona-
virus vaccine, but does saving the lives
of millions mean the profit of a lifetime
for the world’s giant drugs companies?
It is a sensitive issue and last week it was
addressed by Pascal Soriot.
Asked about the “commercial
opportunity” that the pandemic had
created for companies such as Mr
Soriot’s Astrazeneca, the FTSE 100
company’s chief executive said: “Every-
body needs to be vaccinated and the
only way to do that is to bring a vaccine
which is at low cost, so governments
and donors can finance a vaccination.
It is a time in history when mankind as
a whole is really frightened.”
Thus Astra, funded by orders for an
unprecedented two billion doses, has
committed to producing the vaccine it
is developing with Oxford University’s
Jenner Institute at cost during the pan-
demic phase.
The question is being asked far more
widely, however. Covid-19, which has
claimed more than 673,000 lives so far
and has devastated economies world-
wide, has led to collaborations between
industry, governments, academics and
philanthropic organisations in the race
to produce vaccines. More than 200 are
in development, with 20 or so in human
trials and the most advanced entering
late-stage studies in tens of
thousands of patients. And as the
ventures progress, a rift is emerg-
ing over the issue of profits.
Glaxosmithkline, Astra’s great
London-listed pharmaceuticals
industry rival, is among those operat-
ing on a non-profit basis during the
pandemic. Last week Glaxo, which is
supplying its adjuvant techno-
logy for several vaccine col-
laborations, and Sanofi, of
France, one of its part-
ners, agreed to supply
The profit motive puts
Big Pharma on the spot
as it hunts for a vaccine
60 million doses of their treatment to
Britain for an undisclosed price, bring-
ing the government’s total supply to
250 million doses.
Emma Walmsley, 51, Glaxo’s chief
executive, said recently: “We have been
very clear we don’t expect to profit from
these vaccines partnerships during the
pandemic phase, very specifically
because we want to make sure we are
investing any short-term returns back
into long-term pandemic preparedness
and donating to the developing world.”
However, Big Pharma bosses
addressing a US congressional panel
last month struck a different tone.
Pfizer, the giant American drugs
company, Moderna Therapeutics, a
biotechnology business from Massa-
chusetts, and Merck, another big player
in the United States, said that they were
looking to turn a profit during the
pandemic stage.
“We will not be selling our vaccine at
cost, although it is premature for us as
we’re a long way from understanding
the cost basis,” Julie Gerberding, chief
patient officer of Merck, told the House
of Representatives’ sub-committee on
oversight and investigations.
John Young, Pfizer’s chief business
officer, said that “we recognise that
these are extraordinary times and our
price will reflect that”.
Moderna is seeking to sell
its vaccine for between $25
and $30 a dose and has
been granted $483 mil-
lion from the US govern-
ment to support develop-
ment.
Astra and Glaxo could
benefit, though, if the virus
becomes endemic and patients
need recurring vaccinations.
Jefferies, the broker,
said of Astra’s vac-
cine work that
“there may be a
future commercial
opportunity if re-
vaccination is
required”. It hasestimated $1.5 billion of recurring sales
for Astrazeneca, assuming 250 million
doses per year for developed countries
at about $6 per dose, a “discount to the
estimated US flu vaccine revenue/dose
of around $11 to $13”.
One healthcare investment banking
source said that the global flu market,
worth $4.3 billion in sales and expected
to grow to $6.7 billion by 2026, was a
“good proxy” for the potential future
coronavirus market.
Last week Mr Soriot, 61, said that it
was premature to evaluate the longer-
term commercial opportunity. “If we’ve
learnt one thing from this virus, it is that
it’s unpredictable,” he said. “We’ve
honestly not started talking about
pricing after the pandemic.”
Monika Rai, who used to work at
Glaxosmithkline but is now head of life
sciences at EIP, an intellectual property
law firm, said that profiting from the
vaccine was a “question of balance” for
companies. “There is a difference
between providing a vaccine at a cost
and at a reasonable cost. Another
balance is between whether the public
sector is taking the cost up front, so
putting millions into a vaccine develop-
ment... or letting the privately funded
vaccine come to fruition and then
publicly subsidising it.”
She added that healthcare innova-
tion was “high-risk” and “research-in-
tensive” and that only a handful of vac-
cines would be be successful.
Half of the bosses of global health-
care companies questioned by Lazard
— and perhaps mindful of how the
industry’s image has been battered in
the past by its run-ins with politicians,
especially in the United States, over
pricing — have told the financial
advisory firm that they expect to be
seen in a better light by the public after
the pandemic.
That may be clue as to how the issue
of pricing evolves. The healthcare
banking source said simply that it
would be a “complete PR disaster for
any big pharma company to price a
vaccine at a significant profit”.bb D
octors are
not alone
in being
pushed
online by
the pandemic (Ben
Martin writes). A
chain of vets owned
by the country’s
biggest petcare
business now offers
remote consultations
to meet worried
owners’ demands forsocially distanced
appointments.
Vets Now, which
operates out-of-hours
clinics, started to offer
remote consultations
outside normal hours
just as the lockdown
started and the hours
have been extended to
run from 8am to
11pm, seven days a
week.
Last week Matt
Hancock, the health
secretary, said that all
GP appointments
should be carried out
by video or phone
unless there was “a
compelling clinical
reason not to”.
Vets Now wasfounded by Richard
Dixon, a veterinary
surgeon, and has
more than 60 clinics
and hospitals in the
UK. It was sold to
Independent Vetcare
almost two years ago.
Independent Vetcare
is owned by EQT, a
Swedish private
equity firm.
Dave Leicester,
head of clinical
intelligence at Vets
Now, said: “Having
the capability to offer
online consultations,
where appropriate,
will be beneficial for
pet owners long after
this pandemic has
ended.”Sick as a
dog? The
vet will see
you online
Emma Walmsley says
Glaxo will not profit in
the pandemic phase
Alex Ralph