Benzinga | Mar 18, 2021 11:57AM EDT

AstraZeneca Set To Get Letter From EU As First Step Of Legal Action For Delayed Deliveries: Reuters

The European Commission will send a letter to AstraZeneca as the first step of efforts to resolve a dispute with the company over its supplies of COVID-19 vaccines to the bloc, Reuters reports.

What Happened: Yesterday, European Commission's President Ursula von der Leyen threatened to stop vaccine exports to safeguard scarce doses unless the U.K. starts shipping shots to the bloc.

At a meeting of E.U. diplomats, Germany, Italy, France, and Denmark supported the stance, while the Netherlands, Belgium, and Ireland were more cautious.

According to a diplomat, the main reason for the tougher stance was AstraZeneca Plc's (NASDAQ: AZN) under-delivery to the E.U.

It was required to deliver 300 million doses by the end of June. Instead, now it aims to ship only 100 million, citing production problems and export restrictions.

The E.U. said it exported more than 10 million vaccines to Britain since Jan but got none back, even though two plants producing AZN shots in the U.K. are listed as suppliers in the company's contract with the E.U.

Why It Matters: One shipment to Australia of AstraZeneca vaccines was blocked earlier in March by Italy, in agreement with the E.U. Commission. All other requests have so far been approved for a total of over 40 million shots exported to various countries.

In a different scenario, Britain's supply crunch of COVID-19 vaccines is partly due to a delay in a shipment from India's Serum Institute that makes AstraZeneca's shot, health minister Matt Hancock said.

Britain is using Pfizer Inc (NYSE: PFE) / BioNTech SE (NASDAQ: BNTX) and AZN shots for the immunization, with 10 million doses of the 100 million ordered from AstraZeneca coming from the Serum Institute.

Britain says it is on track to have given the first shot to half of all adults in the next few days, making it one of the fastest countries to roll out a vaccine.

Price Action: AZN shares are trading 0.6% lower at $49.81 in market trading hours on the last check Thursday.