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AstraZeneca Decides It's OK to Make Money From the Pandemic

By Brian Orelli, PhD and Keith Speights – Nov 23, 2021 at 7:54AM

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Lackluster third-quarter results may have contributed to the decision to stop selling its COVID-19 vaccine at no profit.

AstraZeneca (AZN -0.52%) has announced that it will begin selling its COVID-19 vaccine for a profit, after having pledged not to do so while the pandemic was still ongoing. In this Motley Fool Live video recorded on November 15, Motley Fool contributors Keith Speights and Brian Orelli discuss the company's plan for a "progressive transition" to the for-profit vaccine model and its likely strategy of raising vaccine prices notably only for wealthy countries.

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Brian Orelli: Speaking of things we weren't expecting to hear this year, AstraZeneca has decided to start making money off of its COVID-19 vaccine after pledging not to do it during the pandemic. I guess maybe they think the pandemic's over -- I'm not quite sure about that, but do you think the company's rough third-quarter had anything to do with deciding to make the switch?

Keith Speights: Yeah, you're right. AstraZeneca had said on numerous occasions -- it had said it would sell its COVID-19 vaccine at no profit while the pandemic was ongoing. The pandemic is still ongoing, but the company has decided that it's going to start making profits on this. Now, I will note this -- AstraZeneca CEO Pascal Soriot said in the third-quarter conference call that the company is "progressively transitioning" to being profitable with this vaccine. AstraZeneca isn't going to come right out of the gate and start slapping big profits all over the place. Of course, it already has agreements in place, so it couldn't do that anyway if it wanted to.

Soriot said that the price will ensure, and I'm quoting here, "The price will ensure the vaccine is affordable for low- and middle-income countries," so any profits won't be great. It seems to me that AstraZeneca is going to try to jack up the price tag for wealthier countries, and then continue to make the vaccine affordable for the low- and mid-income countries.

In terms of your question, did the third-quarter have anything to do with it? Maybe. I do think that AstraZeneca decided that its altruism had limits, in light of its overall financial picture. Soriot pointed out, though, that any profits from the vaccine this year would be offset by the company's investments in AZD7442, which is its antibody therapy for preventing infection by the virus that causes COVID-19. It sounds to me like AstraZeneca is trying to justify this transition to making a profit on this vaccine by saying, "Hey, all of those profits are still being used to fight COVID-19 on another front, so that's why we're doing this." That's probably really not why they're doing that, but it at least gives them a way to spin it.

Orelli: I think they can do whatever they want, as far as I'm concerned. They're a for-profit company. [If] they want to transition because they want to transition, I don't think investors or the media or the public should really fault them for it. Pfizer (PFE -0.35%) is making plenty of money off of its vaccine.

Speights: Yeah. I think that the biggest thing here is [that] the company said one thing initially, and now it's changing its tune. They'll catch some flack for that. But you are right. These are for-profit companies. And AstraZeneca has been selling this vaccine at no profit for a while now, and so the company can do whatever it wants to do.

Keith Speights owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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