• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Here's Why I'm Avoiding AstraZeneca Stock

The AZN affair exposes the seedy underbelly of drug manufacturing, and the COVID-19 vaccine is certainly a drug.
By JIM COLLINS
Mar 25, 2021 | 10:00 AM EDT
Stocks quotes in this article: AZN, TMO, ARCT

Oh. My. God. I have used the quote from John Hillerman's great character, Jonathan Quayle Higgins, on Magnum P.I. in my RM column a few times lately, but yesterday I think uttered the OMG of all OMGs. It came after I read this excellent, and thoroughly researched (with six authors listed on the byline) Reuters article that noted the discovery of 29 million doses of AstraZeneca's (AZN) COVID-19 vaccine in a facility owned by Catalent in Anagni, Italy. Those doses were found in a warehouse by Italian security services, who seem to have been tipped off by the EU. I can only imagine that it was a Fellini-esque scene with plenty of shouting and hand-gesturing, but it is just mind boggling that these drugs are in a warehouse and not en route to/already in deserving people's arms.

The EU has been markedly behind the U.S. and other nations, especially Israel, in vaccination per capita. The Reuters article noted that only 16 million of the "stranded" doses were bound for the EU, with 13 million earmarked for the WHO'S COVAX program for poorer countries. But what really happened here? Was AZN really "stockpiling" a massive amount of doses in a facility owned by its contract manufacturer, Catalent? The AZN dose is given in a two-shot regimen, so presumably there are 14.5 million people around the world who COULD have been vaccinated, but have not been yet, as those doses were squirreled away.

But by whom? And does this mean AstraZeneca now holds the coveted title of Worst Company in the World? No, of course not. The AstraZeneca affair exposes the seedy underbelly of drug manufacturing, and the COVID-19 vaccine is certainly a drug.

There is a web of contracting and subcontracting that goes into vaccine manufacture of which you are most likely unaware. That supply chain is twisted even further when the issue of vaccine nationalism is introduced. Like it or not, it exists. Countries like Russia and China have no such issues as Sinovac, Sinopharm, and Sputnik V -- which is controlled by Russia's sovereign wealth fund, RDIF -- are used as national champions for the vaccines first, with PR-friendly exports and licensing agreements coming later. But the EU is ruled by a (sort of) free market, and thus there is no way for countries to compel companies to "do the right thing" but there are barriers to vaccine export that are frankly quite scary for me as a former UK resident. The UK is no longer part of the EU, of course.

The EU and UK did issue a joint statement yesterday promising cooperation on vaccine distribution, as the tensions over access to the vaccine within Europe are rising. AstraZeneca does not appear to manufacture any of its COVID-19 doses in the UK. But that's the point. AstraZeneca doesn't make any of its COVID-19 vaccines, anywhere.

In addition to U.S.-based Catalent, the Reuters article mentions U.S.-based Thermo Fisher Scientific (TMO) and Dutch-based Halix as the three manufacturers of AZN's anti-COVID jabs. The WHO has also announced that AZN has licensed the technology to the Serum Institute of India for further broad-scale manufacturing.

That's the weird, wacky world of global pharma. AZN is (rightly) taking fire based on the inclusion of old data in a report issued Monday. That report was corrected Wednesday and the efficacy of AZN's COVID-19 vaccine revised downward to 76% from the previously reported 79%. AZN's vaccine has also been plagued by reports of blood-clots exhibited in patients. Don't forget, though, that those patients were given an "AstraZeneca vaccine" that AZN didn't develop -- the scientists at Oxford University in the UK get most of the credit there -- doesn't manufacture, and really only distributes, although the Italian authorities are not even happy with the way they are doing that. Where is AstraZeneca's value in the supply chain? Frankly, I don't see it.

That's not to say I am anti-science or anti-vax. I am just anti-value destruction and human suffering, and AstraZeneca seems to be producing more than its fair share of both lately.

When it comes to drugs of the future I stick to the science and buy stock in the scientists. Arcturus Therapeutics (ARCT) is a name I have mentioned in prior RM columns. This plucky little bunch out of San Diego has developed its own COVID-19 vaccine candidate, currently in Phase 3 trials in Singapore and the U.S. Catalent will manufacture Arcturus' vaccine, as it does for so many other players, and governments will handle the distribution. But, as I mentioned above, I believe that is the least value-added part of the chain, and that is also not scalable.

The genie is out of the bottle with mRNA technology. Messenger RNA science will be harnessed to fight so many conditions other than just COVID-19 and, I am convinced, science will win in the long-term. In the short term just be prepared for more stories of pharma titans fudging test results and hoarding vaccines, and more countries practicing vaccine nationalism. It's ugly and it certainly makes me want to avoid AZN stock. I have.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jim Collins had no position in the securities mentioned.

TAGS: Drug Approvals | Investing | Markets | Stocks | Trading | Biotechnology | Healthcare | Pharmaceuticals | Coronavirus

More from Investing

When Any News Is Bad News Tune Into the Charts and Indicators Instead

Helene Meisler
May 26, 2022 6:00 AM EDT

How easy it is to follow the market talking heads, but let's be careful of latching onto supposed analysis of 'market participants' and 'market structure' ... whatever those are ...

4 Reasons to Be Cautiously Optimistic About the Tech Sector

Eric Jhonsa
May 25, 2022 5:15 PM EDT

Many tech valuations are now back to 2016 or 2017 levels, and quite a few contrarian indicators point to extreme bearishness.

Forget Hunting for a Bottom, Now Traders Just Want the Pain to Stop

James "Rev Shark" DePorre
May 25, 2022 4:36 PM EDT

No one trusts a bounce to last at this point, and they simply are hoping for some relief from the unpleasant action.

I'm Going to Let the Air Out of a Fundamental Rating of Air Products

Bruce Kamich
May 25, 2022 3:30 PM EDT

APD got a "Buy" recommendation, but my analysis doesn't jibe.

As Pioneer Natural Resources Blazes a Trail Higher, We Have New Price Targets

Bruce Kamich
May 25, 2022 2:50 PM EDT

Here's our updated bullish strategy on PXD.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:33 AM EDT PETER TCHIR

    Thoughts Ahead of the Fed Minutes

    Recent economic and earnings issues are convincing...
  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login