CSL plans research boom after pandemic delays

CSL has championed its commitment to delivering vaccines for Australian citizens but has been clear with investors it hasn’t been easy. Work on the projects had “resulted in significant opportunity costs to our standard business and manufacturing operations and the re-prioritisation of some R&D,” the company said in its ASX results presentation last week.

Mr Perreault said CSL was open to the possibility of making more COVID-19 vaccines than the current contracted amounts in Australia, but he acknowledged long-term production will have an impact on existing operations.

“There is displacement, there are things we would have to stop doing in our facilities with some of our current programs to continue to manufacture [these vaccines] for a long period of time,” he said.

The company’s research projects over the next six months will also include work on a COVID-19 treatment. CSL has been working in an alliance with a range of its global competitors on a hyper-immune product using plasma from recovered coronavirus patients.

Early data on the project is expected in the coming months, with Mr Perreault suggesting coronavirus treatments may be critical in the fight against variants of the virus in future.

“If you do get variants, how do you treat them? The vaccine is great and we need it, but we also need other modalities to help us.”

CSL shares gained five per cent on the day it reported results, but finished last week down 0.8 per cent overall to $274.43 as investors and analysts considered challenges that could be ahead for the business.

Despite its strong first half, the company maintained its full year earnings guidance with expected profits of between $US2.17 and $2.27 billion for 2021.

Analysts accepted that research spending was critical, but were also concerned with the impacts of the pandemic on the collection of plasma, the critical material for making many of CSL’s flagship products. Mr Perreault flagged he was cautious on future outlook because it was difficult to predict the length and impacts of lower collections.

Citi analysts are also finding it difficult to predict future conditions for CSL.

“FY21 remains very difficult to forecast given the number of moving parts both at the revenue and costs line that could fluctuate depending on the evolution of the pandemic,” analyst John Deakin-Bell wrote in a note to clients.