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In New Delhi, India, a health worker delivers the Astrazenica Covid vaccination. Other medications in the pipeline, according to analysts, might enhance AstraZeneca’s shares and earnings in the coming years.
Bloomberg/Sumit Dayal
AstraZeneca
With the rapid rollout of a Covid-19 vaccine, one of only a few still available internationally, the company earned a household name last year. It has now produced over 500 million doses for over 165 countries—all at free cost and with no profit. However, not all of the publicity has been positive. The Anglo-Swedish pharmaceutical company became embroiled in political squabbles between the UK and the EU, while uncommon side effects and production delays drew criticism.
Investors should look past this and remember that AstraZeneca (ticker: AZN), which is listed in London and trades in the United States through its American Depositary Receipts, isn’t only a vaccine firm. It specializes on cancer treatments and provides medication for a variety of illnesses. It has a robust pipeline, a growing number of $1 billion blockbuster pharmaceuticals, and the EU and US have now approved its takeover of AstraZeneca.
Alexion Pharmaceuticals is a pharmaceutical company based in the United States.
(ALXN), a promising new division focused on rare diseases. In the next years, a number of its recently authorized medicines might boost the company’s bottom line and stock price. In a research note, Jefferies analysts said that AstraZeneca’s “excellent” revenue and earnings trajectory is enticing when compared to its European pharma counterparts. Since the trial results that initially received permission for use late last year, questions have been raised regarding the safety and efficacy of the pharmaceutical company’s two-shot Covid-19 vaccine, which was developed in collaboration with the University of Oxford. Medicines produced at such a fast rate for emergency use, on the other hand, were sure to hit roadblocks. In fact, the competing vaccination from
Johnson & Johnson is a pharmaceutical company based in the United States
Because of its links to unusual blood clotting, (JNJ) was briefly banned in the United States. Hundreds of millions of individuals throughout the world have been safeguarded against Covid-19 thanks to AstraZeneca’s vaccination. The European Medicines Agency, the Medicines and Healthcare Products Regulatory Agency in the United Kingdom, and the World Health Organization have all stated that the shot’s benefits outweigh the dangers. Although there is still a long way to go in the battle against Covid, analysts and investors feel that AstraZeneca’s easy-to-distribute, non-profit vaccine will help to burnish the company’s reputation in the long run. Mike Fox, a top-20 stakeholder in AstraZeneca and a fund manager and head of sustainable investment at Royal London Asset Management, commended the firm as “heroic.” In two years, he believes the company’s vaccination will be the most popular. There are already a lot of benefits for investors that are focused on the bottom line. AstraZeneca is the poster child for major pharma turnarounds, according to analysts at research firm Third Bridge, making now a good time to buy the stock. Investors haven’t really absorbed the company’s $39 billion acquisition of Alexion, thus shares are down more than 10% since their latest high in July last year. AstraZeneca is currently trading at 19 times forward earnings, which is a bargain compared to its recent history. It continues to trade at a premium to the S&P 500.
Pfizer
(PFE) and the
Merck
(MRK) has traded at a remarkable discount to the S&P 500 since the Alexion acquisition was disclosed.
Eli Lilly is a character in the film Eli Lilly
(LLY). Since fending off a $69 billion hostile approach from Pfizer seven years ago, CEO Pascal Soriot has overseen the company’s revival. Soriot, a trained veterinarian, had only been in charge for two years. In his defense of Pfizer, he promised to nearly quadruple the Anglo-Swedish pharmaceutical giant’s sales to $40 billion by 2023. He sold commercial rights to older trademarks whose patents were about to expire, such as the cholesterol medicine Crestor in the EU, and used the money to expand AstraZeneca’s research and development investment by 10% in 2020. In an interview with Barron’s, AstraZeneca Chief Financial Officer Marc Dunoyer remarked, “We invested enormously in R&D to re-energize the firm and boost efficiency.” Soriot appears to be on course to fulfill his sales target, with AstraZeneca posting double-digit revenue growth in the last two years, aided by a jump in sales of newer medications.
UBS
Last month, it raised its share price objective to £92 from £80, representing a 6% increase over the current price of £86.78. Soriot has also concentrated the company’s efforts on three key therapeutic areas: oncology, cardiovascular, renal, and metabolic illnesses (CVRM), and respiratory and immunological diseases. Oncology is currently the company’s best-performing and fastest-growing segment, with total revenue expected to rise by more than a fifth to $11.5 billion in 2020, thanks to $4.3 billion in sales of Tagrisso, the company’s breakthrough lung cancer medication. In 2020, oncology accounted for 43% of total revenue year-to-date, compared to 38% a year earlier. AstraZeneca received EU authorisation for novel prostate and ovarian cancer therapies in November. The business now has over ten blockbuster medications in phase 3 clinical studies, each with yearly sales of nearly $1 billion or more. Soriot added a fourth growth engine in December when it acquired Alexion, the largest deal in the company’s history, in a gamble on rare-disease and immunology treatments. AstraZeneca expects the merged company to expand at a double-digit yearly rate through 2025, with double-digit core EPS growth in the first three years. Soliris, which cures a rare blood illness and is one of the world’s most costly treatments, generates the majority of Alexion’s $6 billion in yearly revenues. Soliris is one of the world’s most expensive drugs, costing roughly $600,000 per year. Soliris is unlikely to face competition for several years, analysts believe, because rare-disease patients are often hesitant to switch medications, preserving sales and profits. AstraZeneca is wagering that Ultomiris, a newer form of Soliris that costs an average of $458,000 per year and is shielded from competition in the United States until at least 2030, has a bigger market potential. Despite certain competition risks with Alexion’s current products, Sebastian Skeet, an analyst at Third Bridge, said the acquisition introduces a pipeline that might cure more common ailments and provides growth opportunities in China. AstraZeneca’s Alexion has no sales in China, which is becoming increasingly crucial. In fact, the country currently accounts for 20% of the company’s total sales. “China has the potential to become a very major market for rare diseases, and we are well positioned to develop there when it does,” said CFO Dunoyer. Tagrisso was licensed in China in April for the treatment of early lung cancer, making it the first such medicine to do so, as well as the only one to show efficacy against the disease in a global trial. AstraZeneca confronts certain competition risks in oncology, but Skeet is optimistic about the company’s prospects. “Then there’s the vaccination saga, which has put a bit of a damper on the stock due to some knee-jerk reactions to the vaccine news. On the other hand, it’s critical to remember that AstraZeneca’s underlying fundamentals remain solid,” Skeet remarked. With its choice to sell its Covid vaccination without profit, AstraZeneca has demonstrated that it is a good corporate citizen. This should help it gain favor with the general public and health professionals. Investors can anticipate the benefits of this, as well as growth in the company’s main cancer-treatment portfolio./n
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