Andrew Baum, a healthcare analyst at Citi, believes that any future financial returns on a successful vaccine is unlikely to move the dial for a behemoth such as AstraZeneca, which is both the UK’s biggest drugs firm and the most valuable company on the FTSE with a £117bn market cap.
He says the biggest benefit is one that will stand it in good stead with global policymakers in the future.
“The major return is political capital rather than financial capital,” Baum says.
“Pascal has played this card particularly well, because not only has he very early on stated that he would provide the vaccine at cost, but he went beyond that and said ‘we want as many people to benefit as quickly as possible’. To that end he sub-contracted production to developing world countries so that they can also benefit and reduce their burden of disease.
“Frankly, it’s been a textbook example of optimal public relations and government affairs strategy, and that’s really important.”
AstraZeneca is fighting it out with global players including Sanofi and GlaxoSmithKline as well as smaller biotech firms such as Moderna to be the first to deliver the world’s most effective vaccine for coronavirus.
Baum says that while AstraZeneca is not one of the major players in vaccines – a market that is dominated by GSK, Sanofi, Merck and Pfizer – Soriot could choose to shift the firm’s focus if it proves commercially beneficial.
“Pascal is very pragmatic, and he can change his strategy just on the flip of a dime, as indeed they just did with Covid,” Baum says. “AstraZeneca went from nowhere with that to having the lead candidate vaccine, and that’s because Pascal made the shrewd bet that the upside would clearly outweigh the downside.
“If he believes that governments are going to play a much more significant role in the future of the industry in terms of setting up incentives or capital allocation [for vaccine production], he may deem suddenly it’s actually very important for AstraZeneca to be part of that process.
“I wouldn’t rule that out as a possibility.”