50 Saturday April 30 2022 | the times
Business
5
The chief executive of AstraZeneca
believes that the drugs company’s
Covid vaccine still has an important
global role, despite expecting a decline
in sales and worldwide “oversupply” as
the pandemic wanes.
The Cambridge-based FTSE 100
drugs group yesterday revealed first-
quarter revenue of $1.1 billion for
Vaxzevria, the vaccine developed with
Oxford University, helping to drive up
total group revenue by 60 per cent to
$11.4 billion, ahead of City forecasts.
However, the majority of revenues
for Vaxzevria this year are set to come
from initial contracts earlier in the
pandemic and AstraZeneca expects
total Covid-19 medicines to decline
by a percentage in the “low-to-mid-
twenties” this year. Growth in sales of
Evusheld, its antibody treatment, are
set to partially offset weaker Vaxzevria
sales.
Pascal Soriot, chief executive of
AstraZeneca since 2012, said it was
difficult to predict demand for Covid
jabs as “we are no longer in a period of
scarcity”. Numerous companies have
successfully launched vaccines, espe-
cially Pfizer-BioNTech and Moderna.
Soriot, 62, said that his company’s
vaccine was a “very strong booster” and
there was increasing recognition of
ensuring that vaccines elicit a strong
T-cells response. “There are now more
and more people talking about the
formula brands down during the first
quarter because its supplies were in
demand after Abbott Laboratories, a
rival, was forced to recall its own
product amid safety concerns. Reckitt
said that its baby formula sales had
risen by 30 per cent, although it
expected to increase prices as the
market normalised.
The Slough-based company is in the
process of offloading its baby milk
division, the maker of Enfamil, which
would fully unwind the $16.6 billion
Mead Johnson takeover agreed by
Rakesh Kapoor, Narasimhan’s pre-
decessor, in 2017. The Reckitt boss
declined to comment on what he called
speculation, but last year he wrote
down the value of the asset by £10 bil-
lion and sold its Chinese division.
The group’s health business
increased sales by 20.6 per cent during
the quarter, while its hygiene unit
suffered a 9 per cent decline as demand
fell for its Lysol disinfectant. Stripping
out the brand, Reckitt’s hygiene divi-
sion grew by 3.9 per cent, thanks to
strong sales of its Mucinex and Strepsils
cold products. Narasimhan said Lysol
sales had fallen by 30 per cent in the
quarter, after growing by 70 per cent
over the same period last year, but that
sales were still 40 per cent higher than
they were pre-pandemic.
Two weeks ago Reckitt said that it
would transfer its Russian business
after the invasion of Ukraine. Unilever
has continued to sell personal hygiene
products and ice cream in Russia.
The shares closed up 32p, or 0.5 per
cent, at £62.40 last night.Talk grows
of Johnson
Matthey bid
Continued from page 47
suddenly deciding that the costs
involved would be a poor return on
investment and that the company
would be a loser in competition with
low-cost Chinese and South Korean
rivals. The volte-face was accompanied
by news of the departure of Robert
MacLeod as chief executive.
That was the catalyst to send shares
in the company into freefall, extending
declines over a 12-month period to the
point that it had lost nearly half of its
value, leading to its ejection from mem-
bership of the FTSE 100. The company
closed trading on Thursday valued at
£3.45 billion, yet by yesterday’s close it
was valued at more than £4.1 billion
thanks to an 18.9 per cent rise in the
shares to a five-month high of £22.25,
up 353½p on the session. At one stage
during the day the shares were 33 per
cent ahead.
MacLeod was replaced by Liam
Condon, 54, a former executive of
Bayer, the German chemicals group,
who has been conducting a review of
and plans to unveil a new strategy for
the business at its annual results late
next month.
Standard Industries has taken its
stake in Johnson Matthey through its
Standard Investments unit and that
division’s Standard Latitude Master
Fund.
The company is the creation of
Samuel Heyman, one of Wall Street’s
legendary corporate raiders of the
1980s. Standard Industries was created
after Heyman took control of GAF, an
American roofing company. The con-
glomerate’s businesses employ 20,000
people around the world.Higher prices ease pain of
declining sales at Reckitt
Ashley Armstrong Retail EditorCovid vaccine continues to
boost AstraZeneca revenue
importance of T-cell stimulation and in
terms of the long-term protection the
vaccine offers, but also the broad pro-
tection against severe disease,” he said.
AstraZeneca, which has delivered
2.9 billion doses globally, has started to
sell the vaccine commercially, having
initially sold it at cost. It will continue
selling to low-income countries on a
non-profit basis.
Evusheld generated sales of
$469 million in the first quarter.
Soriot said the British government
had not yet placed an order forEvusheld and was one of the “very rare”
developed countries not to have done
so. “It’s a sad situation, quite frankly,
because people who are immunocom-
promised are really suffering from the
Covid crisis,” he said.
In the United States, where Evusheld
has been authorised and is being sold,
access has been curtailed by logistical
issues, with some patients struggling to
locate an institution or hospital offering
the treatment.
AstraZeneca is one of the world’s
largest drugs companies and has be-
come a household name through the
success of its vaccine. Despite the focuson the jab, its finances, share price and
prospects have been transformed in the
past decade by the successful develop-
ment and launch of a series of new
drugs, particularly cancer treatments.
Sales of oncology drugs rose by 25 per
cent in the first quarter, although the
pandemic has hindered cancer
diagnosis and treatment. Soriot said he
believed that “things will normalise
over the next few months”.
Biopharmaceutical revenues rose by
18 per cent, with Farxiga, a bestselling
diabetes treatment, generating sales of
$1 billion in the quarter. Revenues from
rare diseases increased by 7 per cent,
after last year’s $39 billion acquisition of
Alexion in the largest deal since the
drugs group was created in 1999
through the merger of Astra, of Swe-
den, and Zeneca, the British group.
Alongside yesterday’s trading update
and before its annual shareholder
meeting later in the day, AstraZeneca
announced plans to lease a new
research and development centre and a
corporate headquarters for Alexion at
Kendall Square in Cambridge,
Massachusetts, a life sciences hub. The
site, scheduled for completion in 2026,
will bring together 1,500 research, com-
mercial and corporate employees.
AstraZeneca reiterated its full-year
guidance for the year, including total
revenue growth at a “high-teens per-
centage”. Shares in the company, which
hit new highs this month, closed up by
103p, or 1 per cent, at £106.65.Alex Ralph
The maker of Dettol and Durex has
become the latest company to pass on
rising costs to consumers, helping to
cushion it from falling sales of cleaning
products.
Reckitt Benckiser increased its prices
by 5.3 per cent during its first quarter,
boosting like-for-like sales by 5.6 per
cent, significantly above the 1.5 per cent
growth forecast by City analysts.
In doing so, the FTSE 100 company
has followed Unilever and Nestlé, its
rivals, which also are raising prices to
cope with inflationary pressures from
higher raw materials, freight, transport
and energy costs.
Laxman Narasimhan, Reckitt’s chief
executive, said the business expected
inflation to be in the “high teens” rather
than the “low teens” it had suggested in
February. He added that 80 per cent of
the inflationary pressures Reckitt faced
came from higher raw materials costs
and 20 per cent from commodities such
as fuel. Products more exposed to
energy or metal costs, such as canned
goods, faced high inflation.
Narasimhan said despite analysts’
concerns that the soaring cost of living
would prompt more shoppers to switch
to cheaper own-label brands, “we
haven’t had an issue passing on any
higher prices”. Sales volumes at Reckitt
have continued to rise, by 0.3 per cent in
its first quarter. Reckitt does expect
operating margins to be flat this year.
Narasimhan added that Reckitt had
made the “responsible” move of keep-
ing the prices of its American baby$1.1bn
First-quarter revenue from Vaxzevria
vaccine, out of group total $11.4 billionIf we don’t both agree,
we don’t do it: how
‘brothers’ do business
Behind the story
T
hey are both
called David, they
both married a
daughter of the
boss and, as co-
chief executives, they now
both run the company
(Robert Lea writes).
In their forties and
routinely clad in blue jeans
and pale shirts, David
Millstone and David
Winter inherited the
operation controls of the
privately held Standard
Industries when in 2009
their father-in-law Samuel
Heyman, one of that legion
of American corporate
raiders of the 1980s, died.
Unsure how the
management of the group’s
businesses should be
carved up, Winter told the
Financial Times in a 2019
interview: “We very
quickly made the decision
that dividing up the world
was probably not a great
model for the next chapter
of our lives. That’s when we
decided to just jump off the
cliff together and be 50-50
partners in every way.
“If we don’t both agree,
we don’t do it, which leads
to us hashing it out until
we come to some cohesive
decision.”
In a separate interviewwith The New York
Times, Winter said
he and Millstone
were “as close as
brothers”.
Millstone comes
from a family of
lawyers, studied
law at Harvard
after mathematics
and philosophy at
Yale and spent
time at Bear
Stearns, the
investment bank,
before joining his
father-in-law’s
businesses.
Winter comes
from a wealthy,
property-owning
family whose real
estate interests run
to many billions of
dollars. He studied
politics and economics
at the University of
Pennsylvania.
Their part to date in the
green industrial revolution
is diversifying Standard
Industries’ GAF roofing
giant into roof-mounted
solar panelling.
Heyman made his
money in property before
becoming involved in
corporate raiding,
including a short-lived tilt
at the London Stock
Exchange. He ran his own
hedge fund in later life.David and Elizabeth
Winter, left, and
David and Jennifer
Millstone have kept
Standard Industries
as a family concernPATRICK MCMULLAN/GETTY IMAGES