AstraZeneca sees years of growth as drug sales turn corner

Strong demand for AstraZeneca’s new drugs – especially those for cancer – drove a return to sales growth in the third quarter and the drugmaker said it anticipated years of sustained improvement and rising profit margins.

Product sales in the three months rose 8 per cent, or 9 per cent in constant currencies, which is the benchmark AstraZeneca uses for measuring the return to growth that it has been promising for 2018.

It is the first quarter of sustainable product sales growth since 2014 and shares in the group, which resisted a takeover bid by Pfizer in 2014, rose more than 5 per cent to hit a record high of £61.85 on Thursday.

AstraZeneca has faced a massive loss of patents on older drugs since 2012, wiping out more than half of its sales. But a batch of 10 new medicines – which grew 85 per cent in the latest quarter – now offer a path to accelerating growth.

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"When we set out our strategy a few years ago, not everybody believed we could transform AstraZeneca," said chief executive Pascal Soriot.

AstraZeneca’s wave of new medicines include Imfinzi and Tagrisso for lung cancer, Lynparza for ovarian cancer and Fasenra for severe asthma. Sales of Tagrisso, Imfinzi and Fasenra all beat analysts’ forecasts, although Lynparza missed marginally.

Diabetes drug

AstraZeneca also has high hopes for diabetes drug Farxiga, which cut heart risks in a major study. The full details of that trial will be unveiled at a medical meeting on November 10th.

China remains a stand-out market, with quarterly sales up 32 per cent in the quarter, as AstraZeneca continued to outperform rivals in the world's second biggest drugs market, where it is turning increasingly to smart tech to drive sales.

Despite the good news on the product front, however, AstraZeneca is still transitioning to its new growth phase and total revenue and earnings both fell in the quarter, as analysts had expected.

New drug launches

Overall revenue was down 14 per cent in dollar terms to $5.34 billion and core earnings per share, which exclude some items, declined 37 per cent to 71 US cents, reflecting sharply lower income from divestments and investment behind new drug launches.

Analysts, on average, had forecast earnings of 72 cents on revenue of $5.3 billion, Refinitiv data showed. – Reuters