New drug launches weigh on AstraZeneca profits

AstraZeneca reported lower than expected earnings on Thursday after product launches dragged on profits last year, but it said it was “very much on course” to launch 15 new drugs by 2030.

Shares in the Anglo-Swedish drugmaker fell 6 per cent in morning trading after the FTSE 100 company posted earnings before interest, tax, depreciation and amortisation of $13.5bn for 2023, below consensus estimates of $14.5bn. The group said it was affected by costs associated with the launch of new drugs including asthma medicine Airsupra.

AstraZeneca beat expectations on sales, however. The company reported revenue of $45.8bn for 2023, up 15 per cent at constant exchange rates and excluding Covid-19 medicines. The result was slightly ahead of analysts’ forecasts and was driven by oncology drugs, which made up more than a third of sales.

“Our exceptional pipeline delivered four new medicine approvals in 2023. We are very much on course for 15 new medicines by 2030,” said AstraZeneca’s chief executive Pascal Soriot, who forecast that the company would generate revenue growth in low double-digits to low teens in 2024.

The business has “the broadest and deepest pipeline of any [European] pharma company” said analysts at Barclays, with more than a dozen drugs reaching blockbuster status, with more than $1bn in sales in 2023.

But shares are down by about 7 per cent since the start of the year, after the company disappointed investors in July with weaker than anticipated results for datopotamab deruxtecan, a much-awaited cancer drug developed with Japanese partner Daiichi Sankyo.

The medication is one of a new generation of more targeted oncology treatments developed by AstraZeneca and Daiichi Sankyo that have fewer side effects for patients. Enhertu, the first drug from the partnership, brought in $261mn in 2023 and is under regulatory review for a series of different cancer treatments.

AstraZeneca has a portfolio of well-established cancer drugs including lung cancer medicine Tagrisso, which had more than $5bn in revenues last year. It has also made a bet on the new generation of cancer drugs known as antibody-drug conjugates, such as Enhertu.

Oncology sales grew 20 per cent at constant exchange rates, helping offset tumbling revenue from the company’s Covid medicines. AstraZeneca’s jab developed with Oxford university was widely used across the world, but sales fell more than 99 per cent to just $12mn in 2023.

In November, the company entered the race to develop an obesity drug, signing a licensing agreement with Chinese company Eccogene to develop an oral obesity pill, in contrast to Eli Lilly and Novo Nordisk’s injectable weight-loss drugs already on the market.

The Financial Times reported in June that AstraZeneca had drafted plans to spin off its China business but Soriot said the country remained attractive for acquisitions and that he would “continue to look at what we can source in China; China is an important part of innovation in our sector these days”.

Emily Field, an analyst at Barclays, said: “Of course shares could open down on the weak” after AstraZeneca issued slightly lower earnings per share than expected for 2023. However, she added that she was encouraged by the drugmaker’s “strong forward-looking guidance and pipeline.”