In August the EU paid $400 million for 300 million doses of the Astrazenaca vaccine. The contract was for delivery early February 2021.
The EU has now been told, last week, that they will only receive about 40% by the end of February, if then.
Can you blame EU politicians for being annoyed.
What most are calling for is an explanation and transparency from AZ. But one German politician is pushing to stop exports of vaccines from Europe to the UK.
The Brit media are of course ignoring the facts and only reporting on the EU blocking exports of vaccines from EU to UK.
gallois wrote:
Can you blame EU politicians for being annoyed.
You can never blame someone for being annoyed by himself. And that is exactly what the EU politicians should be:
I have never seen a contract where you pay 400 million (or even much less money) in advance without a clause on significant contractual penalties. If the politicians could not negotiate a clause that would basically have AZ pay the entire money back (potentially even more than that as damages) if they delivered less than 50% of the contracted volume, they were either stupid or they should have known in advance that AZ never planned to fulfill its commitments.
Unfortunately this is what we see too often: Totally naive politicians (that might have been great elementary school teachers prior to their political career but have never in their life negotiated a contract beyond the value of their apartment) are negotiating with professional commercial departments that don’t do something different for their entire life. That can not work out.
If the contract really had no significant penalty, AZ would have been outright stupid if after the deal with the EU they did not try to sell the same capacity to someone else at a higher price and not deliver to the EU (and was obviously quite happy to have EU as a guaranteed floor buyer). But can you really blame them to stick to the rules of a game that EU plays without even having a rulebook?
gallois wrote:
In August the EU paid $400 million for 300 million doses of the Astrazenaca vaccine. The contract was for delivery early February 2021.
The EU has now been told, last week, that they will only receive about 40% by the end of February, if then.
Can you blame EU politicians for being annoyed.
What most are calling for is an explanation and transparency from AZ. But one German politician is pushing to stop exports of vaccines from Europe to the UK.
The Brit media are of course ignoring the facts and only reporting on the EU blocking exports of vaccines from EU to UK.
Do we know the whole story?
There will be commercially sensitive contracts in place here, which doubtless may vary between the parties and when the orders were placed and what terms may pre-exist regarding scaling back suppplies etc. These are normal. Probably those with early contracts will have better and more exacting terms than those who placed their orders later. For example, and I am grossly simplifying, those who got their orders in first might have been pretty much assured of the volume, as later orders arrive, the companies would be aware the risk of not being able to fulfill the orders would have grown, and so there would be escape clauses for delivery short falls. This much is normal commercial practice. It isnt all one sided either. Those ordering early were speculating the vaccine would be succesful. They could have caught a big cold. Those placing their orders later may have percieved they were taking less risk, but the reward for less risk is often a lesser return. Of course there is a moral aspect, but between equal players the commercial terms should also be respected.
If the commercial terms are indeed at issue, and these are simply set aside because one country feels supplies should simply be distributed equally, then there isnt much point in having any commercial terms at all, and, if, for example (and I am only suggesting) one country agreed to pay more than another for more favourable terms then their taxpayers may rightly argue they had better get some money back if the terms are changed simply because another customer doesnt like them.
Take this to its logical conclusion and all supplies should be divided up in ratio to the population of the different countries of the world. It is a nice idea, but unfortunately not realistic.
I hope whoever is on the wrong side of the contract doesnt use their influence to their advantage after the event, because they will not be trusted in the future.
I don’t recall the EU being quite so vocal when pfizer announced delays from the US.
But I certainly understand their desire to lash out rather than reflect on their own failures. The EU unfortunately has been pretty poor when it’s come to the vaccines which is being shown pretty clearly now.
I also see today that the French vaccine attempt has been dropped due to poor performance.
Silvaire wrote:
I have no idea where earth and humanity sits in relation to the cosmos
In the unfashionable western spiral arm, of course.
gallois wrote:
In August the EU paid $400 million for 300 million doses of the Astrazenaca vaccine. The contract was for delivery early February 2021.
The EU has now been told, last week, that they will only receive about 40% by the end of February, if then.
Can you blame EU politicians for being annoyed.
and perhaps to the specific point I suspect this question could only be answered if you had full sight of the whole contract! You might well be surrpised if this isnt your basket how good the pharmas are at their contractual work and their ability to understand how supply and demand for drugs works commercially, after all it is what they do day in day out. Strangely, the UK is all not too bad at it, if only because the NHS has had to be pretty good at procurement.
On the contrary, the UK media is fully reporting the AZ situation.
It is not correct that the EU contract was for 300 million doses delivered in early Feb 2021. This number is way out of the ballpark – it would mean the EU overnight having more of any vaccine than anyone else, quite possibly more than the rest of the world combined.
The expected first-stage of the contract was 100 million doses in Q1 2021. AZ has advised it is unlikely to meet this because of lower-than-expected production yields at certain EU-based facilities in the production chain. This sort of thing is to be expected (indeed Pfizer has done same) and it is highly likely the contracts are all on a best-endeavours basis, subject to satisfactory production scale-up, and have no provision for sanction in the event of late delivery.
The EU is not blocking exports, it is introducing a notification register for such exports. It seems highly unlikely that the EU, politically, would be able to dictate where an American multinational with a factory based in Brussels can or cannot export to.
The national leaders are pretty good, but the talking heads at the EU seem to need a few lessons in diplomacy – particularly the chap who was quoted as saying that AZ should cut deliveries to the UK in order to fullfill the EU order. They have just spent 2+ years trying to absolutely screw the UK and ensure that Brexit causes us maximum harm, and the moment we have something they want their strategy is to revert straight to hostile rhetoric. Interesting. Perhaps it indicates why the EU is necessary to keep the peace in Europe: it seems some of these people get very angry the moment something doesn’t go their way.
The real scandal in the EU vaccine procurement programme is the French securing a massive slice of the contract for Sanofi’s non-existent product. If Brussels can encourage the French and the Germans to shout at the Brits, it prevents them shouting at each other. Maybe Brexit is actually beneficial to keeping the EU together because it gives them a bogeyman.
Of course it was no coincidence that Oxford University partnered with AZ – we do make the odd smart move. The Germans may have invented a more effective vaccine, but have handed over control of development and production to the Americans.
Malibuflyer wrote:
that AZ never planned to fulfill its commitments.
That’s quite an assertion. I don’t believe for a second that AZ did business with that intention.
There is a shortage of supply and high demand. The EU have (apparently) requested that AZ prioritise them over other customers, and it seems AZ have declined.
Graham wrote:
This sort of thing is to be expected (indeed Pfizer has done same) and it is highly likely the contracts are all on a best-endeavours basis, subject to satisfactory production scale-up, and have no provision for sanction in the event of late delivery.
Exactly.
These are normal commercial terms and it is likely the politicians are playing politics, and relatively dangerous politics, because they may end up looking pretty stupid, although they usually get away with it because there will aslo be NDA, so they know it is difficult for the drug companies to hit back with – “but you knew this full well when you signed the contract with us”.
I have not seen the contract, it might well be that there are penalty clauses. Perhaps the EU should not trust AZ. I have only seen reports from the EU.
The problem here is something that is also happening in the UK. AZ are not meeting its commitments and the EU want to know why.
I would have thought that UK politicians would also want to know why they line up a vaccine centre, a load of doctors and volunteers a queue of eager patients, most of them elderly who have managed to drag themselves to the centre, all to be told that the promised vaccines have not arrived and they will all have to come back another time.
