How high is the European Union's compensation claim to AstraZeneca?

For the delay in the delivery of doses of the anti Covid-19 vaccine Vaxzevria, the EU has asked for a large compensation to the Anglo-Swedish pharmaceutical company. This is what it could be, in euros, if the court in Brussels were to accept the request of EU lawyers

(photo: Nataliya Vaitkevich / Pexels) The vaccine race has now turned into a battle in court. This happens at least in the case of the Vaxzevria vaccine, the Oxford-AstraZeneca formulation which, as is well known, has been at the center not only of a controversy (not yet concluded) about rare side effects, but also of a series of alleged delays in deliveries, in violation of contracts signed with the European Union. This, at least, is the thesis supported by the team of lawyers led by Rafaël Jeffareli and charged with defending the interests of the EU Commission and all 27 countries of the Union in the legal confrontation that began yesterday in the court of Brussels.

According to what was communicated by the Reuters agency and taken up by newspapers around the world, the specific request made against the Anglo-Swedish pharmaceutical company is to fine the company for 10 euros for each day of delay for each dose of vaccine not delivered on time, to which to add a lump sum of 10 million euros in penalties (according to some news sources, even these per day) for each violation that will be identified with respect to what is reported in the text of the signed contract. For the biased lawyers this is a "manifest violation" of the contract, aggravated by the fact that 50 million doses produced on European soil in the Dutch Halix plant in Leiden were destined outside the EU, including the United Kingdom.

The defensive line of the company, at least according to what has been made known by the defense lawyer Hakim Boularbah, seems instead to be set on the thesis that what is written in the contract does not oblige AstraZeneca to allocate all its production sites to the Vaxzevria vaccine , and therefore that the effort put in place in the production would be compatible with that "best effort" promised by the company and written down on the contract. In practice, therefore, the sustained idea is that the delay with respect to the agreed timing would not represent a breach of the contract, as it is attributable only to the impossibility of performing better than what has been done.

Let's do some calculations, doses in hand

Regardless of who will win in the end in court, in the complex legal battle that could end as early as June (at least in the first degree of Belgian justice), what overall figures are we talking about for the compensation required? First of all, a couple of premises. The first is that the amount of the penalty requested is enormously higher than the price of each dose. As is known, in fact, the cost of a Vaxzevria dose is close to 2 euros and, assuming a month's delay in delivering the dose, the lawyers' request is that the compensation be 300 euros. Which become 1,800 euros if the delay is hypothetically 6 months. Of course, this high figure is justifiable by the fact that the damage is not so much the skipped delivery of a product worth 2 euros, but that failure to comply with the schedule causes damage to public health, which then affects the economy causing a ripple effect.

The second premise is that it would be a continuously increasing figure, in the sense that the amount would continue to increase day by day since the doses have not yet been delivered and that the delay is continuing to accumulate. In short, you can do the math today or based on short-term projections, while it is much more complex to go further in time.

Let's get to the numbers. According to the contract signed last September, AstraZeneca should have delivered around 120 million doses of the vaccine to the European Union by the first quarter of 2021. And, as it turns out, only a quarter of these doses would actually have been delivered by the end of March, for a total of about 30 million. It does not seem to be going much better in the second quarter: quarterly deliveries are expected to reach 70 million by the end of June, compared to a predetermined total of 180.

In practice, at the end of the first quarter the delayed doses were 90 million, at the end of the second they will be (as far as we can foresee to date) 200 million, that is to say we will reach 100 million delivered against the expected 300. This means that between 1 April and 30 June 2021 alone, the penalty would amount daily from an initial minimum of 900 million euros to a final maximum of 2 billion euros. Assuming linear growth over the three months from April to June, this would mean a total of 130 billion euros for the second quarter, to which we can then add the share corresponding to the first quarter (which with the same method we could estimate at another 40 billion euros) and all that will remain in the second half of the year. Faced with these figures, the 10 million euros (daily or less) for each breach of contract sound almost negligible.

Moreover, taking a more detailed account, the figures would more likely turn out to be even higher. According to what reconstructed by Quotidiano Sanità, for example, in early May the actual delay in deliveries amounted to roughly 150 million doses (50 delivered against 200 scheduled), while with the hypothesis of linear growth of the estimate model reported above it would have been 127 million doses. In short, the exact bill with the entire calendar of deliveries in hand could become close to 150 billion euros for the second quarter alone.

The scenarios

It is difficult to predict the outcome of the procedure judicial, as much will depend on the interpretation that will be given of the exact contractual wording. More than a discussion on the deliveries, which are obviously something objective, the focus of the dispute is about the concrete meaning of the signed words. It is likely, however, that if it is a question of compensation, the figures will be deflated with respect to the requests made by the European Union. And it is not yet clear on which time frame the sanctions could be assessed, if on the first two quarters of 2021, if only on the first or on another one.

The overall figure, moreover, would put economic stability in serious difficulty of AstraZeneca itself, whose global turnover in 2020 was 26.6 billion dollars (about 22 billion euros), and about 24 billion dollars in 2019. The company's total capitalization is just over 100 billion. In short, the figures we are talking about are of the order of the company's overall turnover. We'll see.


Social Network - 8 minutes ago

Facebook will hide posts from conspiracy theorists

adsJSCode ("nativeADV1", [[2,1]], "true", "1", "native", "read-more", "1"); Politics - 2 hours ago

Joe Biden ordered new coronavirus origins investigation

adsJSCode ("nativeADV2", [[2,1]], "true", "2", "native", "read-more", "2"); Medicine - 5 hours ago

Before vaccinating young people it is better to donate doses. WHO appeal

Topics

Coronavirus vaccine AstraZeneca-Oxford Coronavirus vaccine globalData.fldTopic = "Coronavirus, AstraZeneca-Oxford vaccine, Coronavirus vaccine"

This opera is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.