Swedish biologics site a factor in Q1 margin decline, says AZ

By Flora Southey

- Last updated on GMT


Related tags Astrazeneca

AstraZeneca says the build-up of biologics manufacturing capacity at its yet-to-launch facility in Sweden has contributed to a reduced core gross margin this quarter.

Q1 results revealed AstraZeneca’s core gross margin had fallen by four percentage points to 78.8%.

Low absorption of AstraZeneca​’s biologics manufacturing facility in Söderträlja, which is “early in the launch,” ​is one of four main factors that have contributed to margin decline, CFO Marc Dunoyer told investors on Friday.

AstraZeneca is building the $285m flexible facility​, equipped with single-use technologies, to make finished biologics for commercial production and clinical trial materials. 

According to spokesperson Jacob Lund, the site will supply medicines for clinical trial programmes of AstraZeneca and MedImmune – the company’s biologics R&D arm – from the end of 2018.

“We will deliver finished products for commercial use once fully operational by 2019,” ​he added.

Manufacturing initiatives implemented in Q1 2017, which resulted in lower cost of goods sold (COGS), also influenced the margin decline, Lund explained.

Other factors cited include the impact of profit sharing with Merck & Co. (known as MSD outside of North America) from its Lynparza (olaparib) collaboration​, and the loss of exclusivity on sales of Crestor​ in Europe and Japan.

Earlier this month​, the firm agreed to sell off-patent drugs Seroquel and Seroquel XR – indicated to treat mood conditions such as schizophrenia, bipolar disorder and major depression – to Luye Pharma Group, in order to focus on cardiovascular, renal, and metabolism and respiratory therapy areas.

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