When the UK-Swedish pharmaceutical giant AstraZeneca agreed to sell their lifesaving Covid 19 vaccine at cost, it was a brave commercial decision. Their action was not wholly altruistic, however. The research costs carried out at Oxford University were covered by the UK Government. The company’s board would have judged that the world would appreciate their Oxford AstraZeneca vaccine giving a massive boost to their brand, especially the developing world.

AstraZeneca vaccine is available at $4 a dose compared to the $20 alternative vaccine producers are charging. It is also capable of being stored at normal fridge temperature rather than -80C like its competitors. Given all of these advantages, what could go wrong? Step in the EU.

The fact that AstraZeneca, alongside the UK has become the political scapegoat for the EU’s failure to successfully procure and roll out a sufficient volume of vaccines for its 500m citizens compared to the US and the UK, is not in dispute. 

The world had witnessed the EU carry out a coordinated, relentless, politically motivated attack on AstraZeneca, casting doubt on its commercial ethics by claiming it was reneging on its contract, which was proved untrue when those contracts were made public. 

Formerly respected EU leaders then stooped to Voodoo science levels to question the efficacy and safety of the Oxford AstraZeneca vaccine, all against the pleas of the EU’s own European Medicine Agency and the world scientific community, and most importantly, the scientific testing and evidence. Both the EU and France have threatened AstraZeneca with massively expensive and damaging legal action.

All these unwarranted attacks on AstraZeneca would be a challenge for any business, but even more so for a company that had taken the noble decision to supply the world with a lifesaving product for no profit. We have a saying in the UK Parliament that seems quite applicable to this situation “No good deed goes unpunished for long.”

The EU’s irrational attacks on AstraZeneca and the UK will not create one extra vaccine dose for its citizens, but it might deflect the EU’s internal criticism for a while. 

The EU’s dismal performance in the vaccine race is demonstrated by its failure to invest in the research needed to create a viable vaccine over the past 12 months. The UK and US Governments invested $20 and $24 per head of their populations respectively into developing a Covid 19 vaccine, the comparable figure for the EU is just $4 per head of population. 

The EU was always looking to free-ride on the backs of the US and UK-sponsored research. With such limited funding, it is no surprise that the EU-sponsored research project at the Pasteur Institute in France failed to create a viable antibody response.

The EU set out to teach AstraZeneca and other pharmaceutical companies a lesson that what the EU demands the EU must get, trying to enforce the supply of vaccines when the contract was signed late and the supplier itself put into the contract that it could not guarantee supply but would ensure “best endeavors” to deliver the vaccine. 

Threats of taking control of EU-based production facilities and export bans also send a strong message to global businesses, but not necessarily the message that the EU intended.

NovaVax, funded in the US, is set to start production at a site in the UK shortly. They signed a contract to supply the UK with 60m doses of its 90% effective vaccine some months ago, despite also having a proposed production site in the EU ( Czech Republic). 

Despite repeated pleas from EU contract negotiators over recent weeks, NovaVax has refused to sign a supply contract with the EU, citing concerns that its production volume might not be sufficient to fulfill the EU contract requirements. 

NovaVax has seen how the EU has treated AstraZeneca. In a short market where demand outstrips supply, suppliers can sell their products to whoever they want, and the difficult and potentially litigious customer becomes the customer of last resort.

Ultimately the EU’s politically motivated action against AstraZeneca has backfired badly, meaning that the EU will get fewer vaccines in the future and pay more for the ones it does secure as it is not regarded as a desirable and trusted trading partner by the vaccine manufacturers. 

The question is, will the unelected and unaccountable political elites who run the EU learn from this lesson or try to double down? 

If they do, they will rapidly find that it has no one is willing to supply it, and of course, it’s the EU citizens who are losing out again.
The EU will learn that no one can beat the market.

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