ii view: AstraZeneca results impress, but China weighs

by Keith Bowman from interactive investor |

Sales of new medicines grew by 59%, with Emerging Markets sales exceeding $8 billion.

Full-year and fourth-quarter results

  • Full-year revenue up 10% to $24.4 billion
  • Fourth-quarter revenue up 4% to $6.7 billion
  • Full-year core or adjusted earnings per share (EPS) up 1% to $3.50
  • Fourth-quarter core EPS down 44% to $0.89


  • Total revenue is expected to increase by a high single-digit to a low double-digit percentage
  • Core EPS is expected to increase by a mid- to high-teens percentage
  • Guidance assumes an unfavourable impact from China lasting up to a few months as a result of the recent novel coronavirus (Covid-19) outbreak

Chief executive Pascal Soriot said:

“In the first full year of our return to growth, we made good progress in line with our strategy. Results from our new medicines and Emerging Markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia. Our collaborations also progressed at pace, including that with Daiichi Sankyo, while there were several regulatory approvals for new medicines in China at the end of the year, such as Lynparza in first-line ovarian cancer.

“Driven by a strong team, 2020 is anticipated to be another year of progress for AstraZeneca. We are becoming a better-balanced business, both regionally and through our medicines.”

ii round-up:

Pharmaceutical company AstraZeneca (LSE:AZN) reported annual and quarterly results marginally shy of high analyst expectations, with fourth-quarter earnings weighed down by increased marketing expenditure for new drug launches.

Accompanying management estimates or guidance for the year ahead also disappointed, hindered by the coronavirus and its possible impact on the company’s China operations. 

The shares fell by more than 4% in early UK market trading, but had recouped all their losses by lunchtime. 

But China and higher marketing spend aside, progress at the company was clear. 

All three treatment areas of Oncology, Cardiovascular, Renal and Metabolism (CVRM) and Respiratory and every sales region grew on a currency adjusted basis over both the final quarter and full year.

Sales of new medicines increased by 59% to $9.9 billion. New medicines accounted for 42% of total product sales, up from 30% in 2018. Emerging Markets sales grew by 18% to just over $8 billion, while China sales rose by nearly a third. 

AstraZeneca shares have outpaced UK rival GlaxoSmithKline (LSE:GSK) by more than 50% over the last five years, rising by more than 60% compared to a gain of less than 10% at GSK. Astra, which operates in over 100 countries, is due to report first-quarter results at the end of April. 

ii view:

AstraZeneca is a global, science-led drug company, focused on the discovery, development and commercialisation of prescription medicines. It is listed on the London, Stockholm and New York stock exchanges. 

For investors, excitement created by developed new medicines and growing sales in Emerging Markets has fuelled a re-rating of the shares. They now trade on a forward price/earnings (PE) ratio of over 25 compared to a 10-year average of less than 15 and a forward PE of below 15 at rival GlaxoSmithKline. 

As such, the dividend yield is now more reflective of growth, although arguably still attractive at just under 3% on a historical basis. Current China challenges aside, these latest results again appear to justify the heightened valuation and reflect progress being made.


  • New medicines now account for 42% of total product sales
  • Oncology or cancer product sales rose by 44% year-over-year
  • Emerging Markets its largest region at 35% of total sales, the US 33%


  • Other medicine sales including those where patents have expired fell by 24%
  • Selling, General & Administrative Expense rose by 16% year-over-year
  • Dividend cover at 1.3 times is below the three-year average of 1.5 times

The average rating of stock market analysts:


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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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