Interactive Investor

ii view: AstraZeneca Q1 results buoyed by cancer drugs

29th April 2022 11:32

Keith Bowman from interactive investor

Famed for its Covid vaccine but with a diverse and growing portfolio of drugs. We assess prospects.  

First-quarter results to 31 March

  • Revenue up 60% to $11.39 billion (£8.9 billion)
  • Core earnings per share up 20% to $1.89
  • Reiterated full year revenue and earnings estimates

ii round-up:

Pharma giant AstraZeneca (LSE:AZN) today delivered robust first-quarter results, pushed higher by growth in oncology, or cancer treatments.

Total quarterly revenue rose 60% to $11.39 billion, with core earnings per share of $1.89 surpassing analyst estimates nearer to $1.70. 

AstraZeneca shares drifted marginally lower in UK trading having gained just over a fifth year-to-date. Shares for GlaxoSmithKline (LSE:GSK), which is soon to demerge its Consumer Healthcare business, have gained by close to 13% during 2022. The FTSE 100 index is up by under 1%.

Oncology related product sales rose 18% to $3.38 billion, while rare disease treatments adjusted for its previous Alexion takeover added a further 7% sales growth. 

Full-year earnings and revenue guidance was reiterated, and plans for a new strategic research and development centre in Cambridge, Massachusetts announced.  

Previous drug approvals have included its Evusheld long-acting antibody authorised for emergency use in the US for the prevention of Covid-19, complimenting its joint developed Covid vaccine. 

ii view:

Founded in 1999 through a merger, Anglo-Swedish pharmaceutical and biotechnology company AstraZeneca today operates in over 100 countries. Its core drug arenas include both Oncology or cancer treatments and drugs for Cardiovascular, Renal and Metabolism (CVRM). A previous $39 billion acquisition of North America’s Alexion has significantly strengthened its rare diseases treatment portfolio. Over 7,000 rare diseases are known of but only around 5% have US Food and Drug Administration-approved treatments.

In all, ongoing investment costs in drug development continue to weigh, and the previous purchase of Alexion at what was considered a full price is also yet to be fully justified and has elevated net debt.

On the upside, drug innovation remains high, with over 20 regulatory drug approvals received during 2021. Cancer treatment sales total around a third of overall sales, while Astra should be able to further leverage its own geographical footprint and extensive emerging markets presence to extend Alexion sales. For now, and with analysts currently estimating a fair value share price of over £115, scope for longer-term optimism looks to remain. 

Positives: 

  • Cancer treatment sales now total around a third of overall sales
  • Alexion adds to its diversity of drug treatments

Negatives:

  • Other medicine sales including patents expiries fell 15% to $435 million
  • Debt has increased due to the purchase of Alexion

The average rating of stock market analysts:

Buy

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