AstraZeneca : EU Clashes With AstraZeneca Over Covid-19 Vaccine Shortfall

By Laurence Norman, Matthew Dalton and Bojan Pancevski

BRUSSELS -- The European Union demanded that AstraZeneca PLC stick to a previously agreed schedule for delivering doses of its Covid-19 vaccine to the 27-nation bloc and, if necessary, supply the vaccine from factories in the U.K.

The demand escalates a clash with the U.K.-based AstraZeneca after the drugmaker said production problems at a factory on the continent would sharply cut supplies to the EU.

Ahead of a meeting between the company and EU officials Wednesday evening, the bloc's health commissioner, Stella Kyriakides, said the EU's contract with AstraZeneca requires the drugmaker to supply the bloc using U.K. factories if those on the continent can't.

"We are in a pandemic. We lose people every day," Ms. Kyriakides told reporters. "Pharmaceutical companies, vaccine developers have moral, societal and contractual responsibilities, which they need to uphold."

The shortfall at AstraZeneca leaves the EU with few options to plug a large hole in its vaccination plans in the coming months. The company told European officials last week that in a worst-case scenario AstraZeneca may be able to provide only around 30 million of roughly 80 million doses EU countries had anticipated for February and March, a roughly 60% decline from the company's earlier estimates.

On Wednesday evening, Mr. Soriot dialed into the videoconference meeting with EU and member state officials. After the meeting, Ms. Kyriakides said she welcomed the "constructive tone" shown but regretted "the continued lack of clarity on the delivery schedule" for the vaccines through March.

Vaccine developers have spent nearly a year setting up production, lining up suppliers and hiring contract manufacturers to start making at least hundreds of millions of doses a year. It would take months for other companies to boost their production to pick up the slack left by AstraZeneca, drug-industry executives say.

Tensions stemming from vaccine nationalism are testing pharmaceutical firms' ability to work across borders. The U.K.'s recent exit from the EU redrew its trade relationship with the bloc, sowing the seeds for the clash with AstraZeneca.

AstraZeneca says it set up vaccine production and supply chains to serve specific countries and regions. Two factories in the U.K. are producing most of the vaccine active substance for the U.K., while a factory in the Netherlands and one in Belgium are producing for the continent, the company says.

AstraZeneca Chief Executive Pascal Soriot said in an interview Tuesday with the Italian newspaper La Repubblica that its contract with the EU only requires the company to make its best effort to supply doses.

"The reason why we said that is because Europe at the time wanted to be supplied more or less at the same time as the U.K., even though the contract was signed three months later," Mr. Soriot said. "So we said, 'OK, we're going to do our best, we're going to try, but we cannot commit contractually because we are three months behind the U.K.' "

The U.K. approved the AstraZeneca vaccine on Dec. 30, while the EU's drug regulator is expected to approve it in the coming days.

Ms. Kyriakides denied the company's claim that it is only under obligation to make best efforts to meet planned deliveries. She called on AstraZeneca to publish the contract, which she said included advance purchase agreements obligating the company to build the capacity to produce the vaccine early so that a stock of doses would be ready as soon as it was authorized.

Ms. Kyriakides said the company's two U.K. plants are under the same obligations to pre-deliver supplies to the EU as its two plants on the continent. And she said AstraZeneca can't give priority to the U.K. market just because the U.K. signed its agreement with AstraZeneca first.

"We reject the logic of first-come, first-served. That may work in the neighborhood butcher's, but not in contracts, and not in our advance-purchase agreements," she said.

Other drugmakers have signaled they won't be able to swiftly increase production to plug any shortfalls in the supply of rival vaccines.

Germany's BioNTech SE, which developed the first Covid-19 vaccine to receive regulatory approval in the West in a partnership with Pfizer Inc., said it was working hard to expand its production capacity in Europe and to meet existing commitments quicker. However, a BioNTech spokeswoman said the companies are unlikely to fill any supply gap caused by other companies failing to deliver on schedule.

The Pfizer-BioNTech contract with the EU stipulates that 300 million doses should be supplied to the bloc by the end of this year, but the companies are working to deliver them faster, the BioNTech spokeswoman said. The EU has proposed buying another 300 million doses, with deliveries beginning in the second quarter of this year.

BioNTech has marshaled a manufacturing alliance of several European companies. This week it tapped French pharma giant Sanofi SA to fill vials with the vaccine and package them, the final step in the production process. The facility will turn out 125 million finished doses this year, Sanofi said, but that production will only begin in July.

A potential choke point in BioNTech's supply chain is the active substance of the vaccine, the messenger RNA, or mRNA, a molecule of genetic material that delivers immunity-related information directly into human cells. In Europe, it is only manufactured at BioNTech's headquarters in Mainz, Germany.

In late February, a new BioNTech factory that will also manufacture mRNA is expected to come online in Marburg, Germany, with a capacity to produce 750 million doses a year. But this extra capacity will be used to deliver on existing orders. The companies have pledged to deliver two billion doses globally this year.

Moderna Inc. has hired the Swiss contract manufacturer Lonza Group to help produce the active substance for its vaccine. At its facility in the Alpine town of Visp, Lonza has built three production lines in less than 11 months with the capacity to produce 300 million doses annually for markets outside the U.S. The EU has ordered up to 160 million doses of the vaccine.

Significantly increasing production beyond that would require new investments that would take another seven to eight months, a person familiar with the matter said.

Write to Laurence Norman at [e-mail], Matthew Dalton at [e-mail] and Bojan Pancevski at [e-mail]

(END) Dow Jones Newswires

01-27-21 1558ET