AstraZeneca’s long-serving chief executive vowed that the future of Britain’s largest drugs group was “never healthier”, as it predicted another year of double digit growth. However, the shares fell as core earnings did not meet market expectations.
The London Stock Exchange announced the full-year results of the company to celebrate the 25th anniversary of the group’s creation through the merger between Britain’s Zeneca and Sweden’s Astra. Sir Pascal Soriot stated that the “outlook for next few years” is “very exciting”.
AstraZeneca expects growth in both its core earnings per share and total revenue this year, which is the preferred measure of profitability. This growth will be “in the low double digits to low teens percent”, driven by thirteen existing blockbuster medicines, with sales exceeding $1 billion, especially cancer treatments.
Soriot, 64 years old, pointed out the FTSE 100’s burgeoning drug pipeline. The company has 27 late-stage Phase III trials for 18 different medicines, of which more than ten have “blockbuster” potential.
He added, “We are on target to meet our goal of launching at least 15 new medicines by 2030.”
The shares of AstraZeneca fell 6.4 percent, or 667p to close at £98.23. This was the biggest faller in London’s premier stock index, as the City digested mixed results for the fourth quarter. The stock fell to its lowest level in two years.
Citi analysts told their clients that, “while some individuals have one-time effects, we’re surprised by the weakness of several key growth drivers”, including cancer drugs Enhertu and Calquence as well as Tagrisso, Imfinzi and Tagrisso, which are offset by legacy products.
The total revenue for the fourth quarter increased by 8 per cent, to $12.02bn from a year ago. This was slightly higher than what analysts in City expected.
The quarter’s core earnings per share, which rose from $1.38 to $1.45, fell short of the $1.50 expected, due to higher costs for research and development and new medicine launches.
Soriot stated that it is “always a challenge to deliver near-term profit and long-term expansion”.
AstraZeneca is a different company since Soriot became CEO in 2012. He also rejected a massive takeover bid from Pfizer a US rival two years later. In the face of the potential for a sharp drop in revenue due to the expiration of patents on old bestsellers, the company has successfully turned around its drug pipeline.
The Anglo Swedish company, along with Shell, has recently opened in Cambridge a new global research center worth £1.1 billion.
It employs about 83,000 people in 130 countries and is valued at approximately £150 billion. The company focuses on therapies for oncology and respiratory, cardiovascular and respiratory diseases, as well as vaccines, and rare diseases.
AstraZeneca, to sustain its growth, acquired Alexion in the US, a specialist in rare diseases, for $39 billion three years ago. It has also been increasing its position on the booming market of obesity drugs as it tries to catch up with its multinational competitors.
As part of an agreement worth up to $ 2 billion, it signed a licence agreement in November with Eccogene (a Chinese company) to develop “next generation” treatments for obesity, diabetes type 2 and other cardiometabolic disorders.
Soriot stated that it is important to develop products that will help obese patients lose “more muscle and less fat”.
Today you lose weight, but you also lose muscle and fat. When you stop using these treatments, you will gain weight. This is because obesity is chronic.
Analysts at Goodbody stated that despite the fall in shares, AstraZeneca still has the potential to lead the industry through the end decade. They cited its impressive pipeline of 178 projects as well as a busy time of near-term readings.
AstraZeneca plans to host an Investor Day in May to detail its expansion plans up to 2030.