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Stock Watch

Will AstraZeneca's share price receive a shot in the arm?

AstraZeneca share price: Boris Johnson holds a vial of the AstraZeneca Covid-19 vaccine

Over the last 12 months, big pharma has made the headlines more often than usual due to the global pandemic. AstraZeneca is one of the companies that became a household name, thanks to its role in the race to discover a Covid-19 vaccine.

Despite this enhanced profile, the AstraZeneca share price currently sits lower than it did in February 2020, after a year of ups and downs for the stock. Will the upcoming full-year results give AstraZeneca shares a boost?

AstraZeneca share price unaffected by company’s new status

AstraZeneca has been at the forefront of the battle to develop a vaccine against Covid-19. As the race heated up, results showed that AstraZeneca’s joint venture with Oxford University had a slightly lower efficacy rate than its peers, and unlike them isn’t a messenger RNA vaccine. Rival Pfizer was the first vaccine to receive UK approval, with the Oxford/AstraZeneca jab being given the green light in late December 2020. This was followed by the Moderna offering, which was cleared for use in early 2021.

Despite the progress made, and the company’s vaccine being approved for widespread use, the AstraZeneca share price hasn’t made the huge gains many would expect. In fact, the stock has taken a hit in recent days, after a trial showed that the vaccine’s efficacy is much reduced when countering the new South African variant of Covid-19. The news caused AstraZeneca’s share price to wobble.

Controversy over EU rollout

The pace of the vaccine’s rollout has caused quite a storm in Europe, after AstraZeneca said it needed to streamline its European operations. This delayed the rollout, with the company citing the slower ratification process by the EU in approving the dose.

Even the goodwill being afforded the company is in short supply – amid a backlash to the slow rollout in the bloc, EU politicians have looked to shift the blame for their own failures onto AstraZeneca.

Germany, Austria and now France have also limited the AstraZeneca vaccine to under-65s, all raising questions around evidence on the jab’s efficacy for older patients. More data is due in the coming weeks, with Sweden, Poland and Belgium all placing similar restrictions.

Strong full-year profits expected

AstraZeneca’s vaccine is being provided at cost price, between $3 and $5 per dose, which means there is not much in the way of upside or profit on the jab, a fact which is visible in the AstraZeneca share price’s movement, or lack of it.

In Q3, year to date total revenues were up 8% to $19.2bn, with product sales up by 9%, driven by strong performance across three therapy areas, with oncology leading the way. R&D expenses rose 8% year on year to $4.2bn. Full-year revenues are expected to come in at $26.4bn, an 8.4% rise on last year.

Challenges still facing the pharma sector

Over the past few years the pharmaceutical sector has undergone a significant amount of rationalisation as it faces the challenges of a lack of innovation, expiring drug patents, and increasing regulation.

AstraZeneca has been at the forefront of this, acquiring Alexion at the end of last year for $39bn, as it looks to build up its presence in the field of immunology.

AstraZeneca announces its full-year results on Thursday 11 February, at 7am. What will the latest numbers mean for the AstraZeneca share price?