AstraZeneca (AZN) Gets Court Order to Supply COVID-19 Jabs in EU
AstraZeneca AZN announced that the Court of First Instance in Brussels ruled in a case related to a supply agreement with the European Union (EU) for its COVID-19 vaccine, Vaxzevria. The court ordered the company to deliver 80.2 million doses by Sep 27, 2021, including the 30.2 million doses which were delivered to Europe in the first quarter of 2021.
AstraZeneca considers the ruling as its victory in the case as the European Commission, the legislative body of the EU, had requested the court for delivery of a total 120 million doses by June-end and 300 million vaccine doses cumulatively by the end of September 2021. The doses requested by the commission was according to the supply agreement the company had signed with EU for Vaxzevria last year.
The court stated that the company has failed in its supply commitment and must meet the ordered dose requirement. However, the court provided relief to the company by reducing the contractual obligations, keeping in mind that the difficulties experienced by AstraZeneca in this unprecedented situation had a substantial impact on the delivery target. The court has also stated that any further failure in meeting the supply criteria will attract a penalty of €10 (approximately $19) per dose not delivered. Moreover, the court has also stated that the company should use its United Kingdom-based plant to scale up manufacturing of doses to meet the supply criteria, if required.
We remind investors that AstraZeneca announced in January 2021 that it will not be able to meet its supply obligations to EU. The European Commission initiated legal proceedings following several failed steps against the company to ensure timely delivery of contracted doses.
This year so far, the company’s shares have risen 16.7% compared with an increase of 7% for the industry.
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The company pointed out that it has already delivered more than 70 million doses of its vaccine as of Jun 18 and it expects its supply to substantially exceed the ordered 80.2 million doses by the end of June.
The court has scheduled hearings of the case on Sep 24 and Sep 29 to assess whether AstraZeneca has met its obligations for COVID-19 vaccine doses to EU.
We note that AstraZeneca faced setbacks earlier this year related to its COVID-19 vaccine. The vaccine was linked to rare blood clots following inoculation, which led several countries to temporarily suspend the use of the vaccine. However, immunizations with the vaccine have started again in several of these countries. Moreover, the company lost its manufacturing partner, Emergent BioSolutions EBS, following a mishap at the partner’s Baltimore facility. Workers at the facility had reportedly mixed up vaccine ingredients of J&J’s JNJ and AstraZeneca’s vaccines. Moreover, these setbacks have likely boosted the prospects of its competitors, Pfizer PFE and Moderna which are two other companies supplying their COVID-19 vaccine in EU
AstraZeneca PLC Price
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Zacks Rank
AstraZeneca currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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