AstraZeneca Will Profit From Its COVID-19 Vaccine—Why It Matters

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Nov. 12 2021, Published 11:33 a.m. ET

Some people view the fight against COVID-19 as a humanitarian effort, but that belief doesn't prevent companies from profiting off of the pandemic. AstraZeneca plans to increase the cost of its coronavirus vaccine, which will bring the company to profit.

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What does this mean for the global vaccine landscape and how will it impact AstraZeneca's bottom line?

AstraZeneca is increasing the cost of its COVID-19 vaccine to make money.

AstraZeneca has been selling its vaccines at a breakeven point, but that's changing. The pharmaceutical company plans to sell its COVID-19 vaccine at a profit, ultimately increasing the price of its shot.

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When will AstraZeneca go from selling at cost to profiting?

AstraZeneca has been operating under a not-for-profit model by selling its COVID-19 vaccines at the same cost it requires to produce them. The price increase is poised to occur at the beginning of 2022 when AstraZeneca will sign contracts that cater to the profit model.

Some of the orders are projected to come early toward the end of the fourth quarter of 2021. In the third quarter, AstraZeneca reportedly earned $1.05 billion in revenue on the vaccine.

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AstraZeneca's plan was always to profit

Developed in tandem with the University of Oxford, the Anglo-Swedish pharmaceutical company always planned to profit off of the COVID-19 vaccine. Despite the fact that the U.S. hasn't approved the AstraZeneca shot series, it was one of the first to receive emergency use authorization in many parts of the world.

AstraZeneca has FOMO

Vaccine maker Pfizer boasted about its $13 billion in vaccine revenue during the third quarter, which contributed more than half of its $24 billion overall sales. The number is a more than 100 percent YoY increase.

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It seems that AstraZeneca wants a piece of that pie. While the company said that it would operate as a not-for-profit throughout the pandemic, it's nixing the commitment by the end of 2021.

AstraZeneca will still offer at-cost vaccines.

The pharmaceutical company will continue to provide at-cost vaccines to developing countries via the Covax vaccine initiative. In fact, AstraZeneca plans to contribute 250 million doses to the initiative by the end of the year.

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AstraZeneca still wants to seek full FDA authorization

Without the U.S. to cater to, AstraZeneca is missing out on a big piece of the COVID-19 vaccine pie—especially as booster shot eligibility starts to open up to the general public. However, that isn't stopping the company from trying. AstraZeneca plans to seek full authorization from the FDA moving forward.

How AZN stock is responding to the news

AstraZeneca (NASDAQ:AZN) is down about 6.5 percent from the market open by 11:00 a.m. ET on Nov. 12. The steep drop-off can be partially attributed to the company's shift to a profit model, but the real reasons include the third-quarter earnings and sales miss. Ultimately, the company's fiscal performance didn't match up with expectations, which left some investors to exit their positions on the news.

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