AstraZeneca has long ranked as one of the world’s major pharmaceutical firms. But its key role in developing a vaccine for the coronavirus has contributed to its market value rising steadily upwards in recent weeks to jostle with cleaning giant Unilever for the position of Britain’s biggest company.
The top five global pharma giant’s market value reached £115bn by the end of July, reflecting a strong portfolio of drugs in areas such as cancer, cardiovascular, gastrointestinal, infection, neuroscience, respiratory and inflammation.
But the strong valuation is also explained by the ‘good data so far’ on its Covid-19 vaccine candidate, which was licensed from the University of Oxford and is currently in large-scale clinical studies. The company plans to roll out two billion doses of the vaccine – which would go some way to protecting a large percentage of the global population.
AstraZeneca’s CFO Marc Dunoyer says the group’s finance function will play a key part in the success of that aim. “The role of finance overall is to help navigate and to find the best calls for the company to meet its objectives,” he says.
When coronavirus struck at the beginning of the year, Dunoyer’s team was a powerful contributor in the decision-making process when it came to responding to the pandemic, even though AstraZeneca had no previous history in producing mass vaccines. “We became aware of the impact of the virus earlier than others because of our large operations in China, where the virus struck first, so we were thinking early on how can we help find solutions to this crisis,” he says.
As the pandemic emerged, AstraZeneca responded in a number of ways, says Dunoyer. “We got involved in the establishment of screening methods, developing facilities in the UK with various partners, and tried to put our science to work finding antibodies that could neutralise this virus.
“During all these activities. we became involved in the work that was led by Oxford University on the vaccine. We went into alliance with them to develop and manufacture and distribute the vaccine, if it works, to all countries around the world, in a fair and equitable manner,” says Dunoyer.
The Frenchman, who has been AstraZeneca CFO since November 2013, says the move to partner with University of Oxford was a natural fit. “They were exploring vaccines but didn’t have the capability to further develop and manufacture and distribute around the world, so both parties agreed we would join up,” he adds.
The level of ambition required to deliver what could be one of the world’s most urgent and significant scientific breakthroughs is not lost on Dunoyer, who says his company’s workforce- numbering over 60,000 wordwide- “are extremely motivated.”
He explains: “It is fair to say the vaccine task is immense. The fact that we need to establish the vaccine at lightning speed is a task of enormous magnitude. Manufacturing two billion doses is more than any company has ever made in a single year. The largest vaccine manufacturer makes one billion dosse for a whole assortment of vaccines, So two billion doses from a company not specialising in the vaccine is obviously a very large challenge to take on. But as we have developed our supply chain with many partners around the world, in many geographies, we hope to be able to satisfy demand,” he says.
Crucial to delivery of the vaccine is the vast Phase 3 (the biggest and most critical) round of testing taking place worldwide that will determine how fast and effective the alliance’s vaccine will be. “We have Phase 3 fully involved in the UK, Phase 3 ongoing in Brazil, another Phase 3 in South Africa, and we have a large Phase 3 operation starting imminently in the US,” says Dunoyer.
Road to resilience
AstraZeneca’s ability to deliver a coronavirus vaccine is based on the sound financial footing of the group, which has experienced strong revenue growth in recent years on the back of a solid drug pipeline- reflected in the group’s steadily improving share price.
But that hasn’t always been the case. When Dunoyer joined, AstraZeneca’s value fell due to many of its leading products coming off patent. This was the case with both Crestor (rosuvastatin) and Nexium (esomeprazole), used to treat cholesterol and stomach acid reflux respectively, which were two of the company’s biggest selling drugs before their patents ran out. –
A turnaround, which would become central to the group’s strategy, was led by CEO Pascal Soriot, who joined a few months before Dunoyer. “At the time there were two important things to define, the first was what direction to take, and this is where you decide your strategic priorities. Another important decision was to define the various stages in the turnaround journey, as it takes many years and many stages.,” says Dunoyer. “The pace of the journey and the speed at which you’re going to be able to recover one part of the organisation or the other, is what finance contributes to,” he says.
Both CEO and CFO put a new plan in place while getting to grips with investor nervousness about the future profit stream, with new drugs such as lung cancer treatment Tagrisso (Osimertinib). “They were expressing concern about stability of the dividend, so in early 2014 the company indicated the revenues of 2017 would be broadly in line with those of 2013.
“We wanted to reassure the market that the decline in sales due to the patent experience, was not going to be too long, or too deep and therefore the U-turn they should be visualising was when the company would start growing again.
“We talked about a return to growth which we defined as starting in 2018, and then subsequent growth thereafter. We managed to modify the dialogue where we turned anxiety around the dividend to the potential for long term value creation and an upside in shareholder value,” says Dunoyer. In 2014 a takeover bid from US rival Pfizer was rebuffed by the new management team.
In its last full year results, delivered on 14 February, AstraZeneca delivered core operating profit up 13 percent from the previous year at $6.4bn on revenue that had increased 10 percent to $24.4bn over the same period, a clear vindication of the turnaround strategy.
At the time, Soriot said “In the first full year of our return to growth, we made good progress in line with our strategy. Results from our new medicines and Emerging Markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia.”
With driving growth must also come a degree of vigilance about what competitors are doing in terms of research and development, as well as wider scientific discovery, Dunoyer explains. “It important to understand your own scientific prowess versus what other companies are doing, because if you develop a great product but you only arrive at number thee or four, it is less impressive than if you are number one or two in any market,” he adds.
What has helped make good decisions has been the strong relationship forged between AstraZeneca’s CEO and CFO as Soriot and Dunoyer’s paths have crossed many times across their careers.
“Pascal and I are maybe an unusual case because we have been working with each other for several decades and we know each other very well. We’ve worked together in different environments and grown together,” says Dunoyer.
This close tie becomes vital when understanding risk appetite at AstraZeneca- a major aspect of the pharma sector where billions are ibvested to develop new drugs. “A partnership depends on who the CEO and CFO is. A different CEO and a different CFO might have a totally different relationship,” says Dunoyer who describes his role as “informing precisely in a timely manner the pilot who can drive the car as fast as possible, while staying on the road.”
The biggest challenge
Dunoyer’s own set of experiences – he has played key finance and business roles at the forerunners of French pharma giant Sanofi and UK rival GSK – will be vital for the days and weeks ahead when big decisions will need to be made in the progress towards delivering a global coronavirus vaccine.
His position as head of rare diseases at GSK may not seem relevant to mass producing vaccines. But he says: “The novelty and the level of unknowns in the rare disease development prepared me for addressing challenges such as the pandemic.
“One challenge can help you anticipate another challenge. The experience 10 years ago of the pandemic flu, which at the time everyone thought would spread around the world, but did not develop, was vital. There are similarities between then and what is happening now.
“We still have a lot of unknowns about coronavirus like, will it be a pandemic like flu and stay with humanity forever? But although there are a lot of unknowns, we need to anticipate the questions and try to answer them faster than usual and scale up the enormous production that will be required to supply a big part of the world as economically and as equitably as we can,” says Dunoyer.
On a personal level, Dunoyer says he is relishing the challenge that developing the coronavirus brings. “You don’t have so many opportunities in a career for an executive to try to at least provide a response to a pandemic threat of this magnitude,” he says.
Dunoyer says he is confident the vaccine being developed by Astra Zeneca and Oxford University will be available later this year. “Obviously Phase 3 will determine whether the vaccine is more safe and effective than others. But if you look at the data that has been published by ourselves and others, the early signs are that this vaccine will generate a response that should be capable of providing protection. The early signs are that it is going in the right direction.
“The fact that many different vaccines are all trying to find an answer to this threat gives me hope that at least one or possibly several will be proven effective and safe. We can’t be sure, which is why we do these very large scale trials in various parts of the world but we are very confident that everything will have been done to make sure every stone will have been turned to provide as early as possible a mass vaccination that can contain. I don’t know if it can eradicate completely coronavirus, but it will certainly contain it,” he says.