- AstraZeneca has received backlash from the EU for delays in vaccine supply
- GSK is set to redouble its efforts in 'next generation' vaccine manufacture
Vaccine nationalism shouldn’t have come as a surprise. Trouble has been brewing ever since Vladimir Putin named the Russian jab after the victorious space race satellite, Sputnik; Donald Trump called on historians to remember that the successful trial results from US companies Pfizer (US:PFE) and Moderna (US:MRNA) took place on ‘his watch’; and Boris Johnson signed a deal with AstraZeneca (AZN) which stipulated that vaccines made in the UK would be offered to Britain first.
It is perhaps a surprise that the European Union has been the first to crack. But then, the bloc is only just recovering from its Brexit bruises and perhaps its poor vaccine rollout compared with the country from which it has just completed a very public divorce has rubbed too much salt in a fresh wound. At the time of writing, 12.5 per cent of Brits have been given their first vaccine dose, compared with 2.5 per cent of the population of the EU.
Now that the vaccine nationalism floodgates are open, it’s going to be hard to close them. The EU may have rolled back its decision to control exports via the border between the Republic of Ireland and Northern Ireland, but international relations have already been frayed. So where does that leave the pharmaceutical companies caught in the crosshairs?
AstraZeneca has been threatened with legal action for not yet providing the EU with its 400m pre-ordered doses. It’s chief executive Pascal Soriot explained the challenges of vaccine manufacture in an interview with Italian newspaper La Repubblica: batches are grown in live cell cultures whose yields can vary dramatically, “the best site we have produces three times more vaccine out of a batch than the lowest producing site”. He said that the EU’s delay in signing a supply contract (three months after the UK) meant the European manufacturing plants hadn’t had time to iron out glitches.
Pfizer’s jab has the added challenge of its lipid nanoparticle casing which is needed to carry the active ingredient into human cells, but is only produced by a handful of manufacturers. In December, the company cut its production target in half after delays in the scale up of the raw material supply chain. The company – whose European manufacturing plant is in Belgium – has also been admonished for falling short of the EU’s vaccine target.
Meanwhile its supply to the UK (which has ordered 40m doses) is now likely to be disrupted by the EU’s new controls which will prevent the company from exporting vaccines if it has not honoured existing European contracts. Similar issues are likely to face Novavax (US:NVAX), which recently reported strong results from a final clinical trial. The British government has pre-ordered 60m doses of the vaccine, but these may be disrupted by supply out of the company’s European manufacturing plant in Germany.
Tariffs and border controls are not the only weapons in the vaccine warriors’ arsenal. The companies which have rushed to get their products approved by global regulators have set themselves up for attacks based on trial results.
German newspaper Handelsblatt might have been wrong to suggest that Astra’s vaccine is ineffective in over-65s, but the fact that only 8 per cent of participants in its final trial were between the ages of 56 and 69 means the jab has not been rigorously tested in a critical age group. Pfizer and Moderna’s trials also lacked depth. In the former, only 162 people from either the vaccine or placebo groups contracted Covid-19, the latter recorded just 95 cases. Add the fact that none of the approved vaccines are known to provide long-term protection, while questions linger over their efficacy in mutated strains of the virus, and it is clear that the Covid-19 vaccine market still has a lot of maturing to do.
Enter GlaxoSmithKline (GSK), Johnson & Johnson (US:JNJ), Sanofi (FR:SAN) and the many other global pharmaceutical companies whose slower clinical trials and steady manufacturing scale-ups might provide them with a better chance to profit from Covid-19 vaccination.
Johnson & Johnson’s single-dose product has been found to be 66 per cent effective in a 44,000-person study which culminated in 468 symptomatic cases. Importantly, the vaccine’s efficacy against severe disease seemed to increase over time, with no cases reported 49 days after immunisation.
GSK and Sanofi put their vaccine trial on hold in December because of insufficient evidence of efficacy in older adults. The study is set to resume in February where the jabs will also be compared with an approved Covid-19 vaccine. The former has also teamed up with US company CureVac to develop a 'second generation' mRNA vaccine, using similar technology to the Pfizer and Moderna jabs.
In 2020, GSK's vaccines business took a knock owing to a delay in immunisations (the focus of national health services was elsewhere), but there is no denying that vaccines are the jewel in the GSK crown. The division contributes 20 per cent of company revenues but 30 per cent of its operating profits owing to impressive margins and has a solid pipeline. GSK is on track to split in 2022, with the low margin consumer healthcare business set to be spun out, meaning vaccines will retain a greater proportion of its profits, with scope for even more innovation.
AstraZeneca may have won the race for vaccine approval, but early victory has put it on a pedestal where it faces immense scrutiny. And while the pandemic will pass, Covid-19 is likely to stick around, meaning the world’s elderly and vulnerable will likely be subject to annual vaccines. The companies with the strongest trial results, which can mass produce vaccines cheaper than anyone else are likely to be the manufacturers of choice for long-term protection from the virus. GSK might have done a very wise thing in biding its time.
