AstraZeneca’s earnings surprise investors as cancer drugs fuel growth
25 Apr 2024
Phase 1AcquisitionFinancial Statement
AstraZeneca’s revenue and profits grew at a rapid clip over the first three months of the year, beating Wall Street expectations as use of the British drugmaker’s flagship cancer drugs widened.
Total company revenue climbed 17% to $12.7 billion and operating profit jumped 22% to $3.1 billion, compared to the first quarter last year, the company said.
Both the revenue and profit figures surpassed consensus forecasts by 7%, according to a note from Leerink Partners analyst Andrew Berens. The strong earnings were a recovery from the fourth quarter, when lower-than-expected sales and higher costs meant AstraZeneca missed profit estimates.
However, executives didn’t change the company’s annual guidance, sticking to a forecast of “low double digit to low teens” percentage increase in revenue and core per-share earnings from 2023, which were $45.8 billion and $7.26 respectively.
AstraZeneca’s London-traded shares rose 6% following the earnings announcement, changing hands at a little over 12 British pounds at that market’s close.
The company’s oncology division, led by lung cancer drug Tagrisso and immunotherapy Imfinzi, accounted for $5.1 billion of sales — up 23% year over year. Metabolic and cardiovascular drugs, which include the diabetes pill Farxiga and blood thinner Brilinta, accounted for another $3.1 billion and grew 20% over 2023.
AstraZeneca hit an important milestone last year, booking nearly $46 billion in revenue to meet an objective CEO Pascal Soriot set a decade ago when the company was fending off a hostile takeover from Pfizer. The company met that goal by shifting its focus away from gastrointestinal, respiratory and cardiovascular medicines and toward oncology and rare diseases, as well as selling off rights to low-growth or shrinking drugs.
Investors are now increasingly looking to AstraZeneca’s pipeline to determine whether growth can be sustained as Farxiga and ovarian cancer drug Lynparza near the end of patent protection. The company will host a research and development event on May 21 to spotlight its pipeline.
In recent months, AstraZeneca has spent nearly $5 billion to acquire four companies. Two, Gracell Biotechnologies and Fusion Pharmaceuticals, are developing medicines in areas where AstraZeneca doesn’t yet have a large presence: cell and radioligand therapies.
Upcoming clinical trial results are mostly in oncology, respiratory and rare diseases. However, the early-stage pipeline suggests AstraZeneca is exploring some higher-risk and competitive markets, too. For example, the company is testing in Phase 1 experimental drugs in obesity, Alzheimer’s disease and a type of cholesterol-lowering drug called a PCSK9 inhibitor.
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