AstraZeneca set to weather Covid in better health than rivals
Before the pandemic, AstraZeneca was highly regarded in the business and pharmaceutical world – seen as one of the UK’s best companies. Now, thanks to Britain’s successful vaccine programme, it is a household name.
The Anglo-Swedish firm, which publishes annual results on Thursday, has sprung to prominence as maker of one of the world’s first Covid-19 vaccines, approved for use in the UK, EU and India. Inevitably, headlines have followed. AstraZeneca has been the focal point of the vaccine supply wars between the UK and the EU and has, as part of that row, faced questions over the effectiveness of the jab in the over-65s.
Last week brought some respite when analysis of fresh data from three trials found that a single dose of its vaccine conferred an average 76% protection against Covid-19 for at least three months and cut transmission of the virus by 67%.
The last time AstraZeneca was in the news this much was in 2014, when it fended off an unwelcome £70bn takeover approach from US rival Pfizer, pricing its shares at £55. Six years later, in July 2020, AstraZeneca’s share price hit a record high of £93.20, after a successful transformation under chief executive Pascal Soriot. Picking the right research bets – in particular cancer drugs such as Tagrisso and Lynparza – has given AstraZeneca a strong oncology portfolio, while UK rival GSK is still trying to build one.
AstraZeneca’s collaboration with Oxford University on the Covid-19 vaccine boosted its reputation and drove its share price higher. The drugmaker overtook Royal Dutch Shell and Unilever in May to become, for a couple of months, the biggest FTSE 100 company.
But unlike Pfizer, which expects to rake in $15bn (£11bn) in sales this year from its Covid-19 vaccine developed with Germany’s BioNTech, AstraZeneca says it will not make a profit from its vaccine and is providing it at cost price during this pandemic, at between $3 and $5 a dose. Any profits would come in future years, although the firm will face competition from other vaccines.
Its antibody cocktail AZD7442 – which uses artificially generated antibodies to imitate the body’s natural immune response – is being tested as a preventative Covid treatment for those who cannot be vaccinated, and as a therapy for those ill with the virus. Other firms, including Eli Lilly, GSK and Regeneron, are also developing such antibody treatments, and though scientists have raised doubts over their effectiveness against the new Covid variants, this could become a competitive market.
So, AstraZeneca’s main growth engine is its cancer drugs, such as Enhertu for breast, gastric and other cancers, developed with Japanese company Daiichi Sankyo, and Calquence, for the aggressive mantle cell lymphoma.
Other potential blockbusters, with annual revenues of at least $1bn, include the asthma medicine Fasenra, which can spare patients the use of steroids. The company has had a good run lately: for example, its diabetes drug Farxiga has just been approved to treat heart failure in China and could become a mega-blockbuster, with Barclays forecasting peak sales of $3.8bn in 2025.
The Cambridge firm has fared somewhat better in the pandemic than GSK, which it supplanted in 2019 as Britain’s biggest pharmaceutical company by market value, although its sales are below those of GSK.
Analysts are expecting AstraZeneca to have made $26.4bn of revenues in 2020, compared with $24.4bn the previous year. It remains to be seen whether its recent $39bn acquisition of rare diseases specialist Alexion, its biggestever deal, will pay off. Analysts fear AstraZeneca may have paid too much but the company plans to take some of Alexion’s medicines into China, where it has opened five new regional headquarters in the past two years, and generates a fifth of its revenues. In any event, AstraZeneca is a lot stronger, and better known, than it was in 2014.
Diabetes drug Farxiga has just been approved to treat heart failure in China and could become a mega-blockbuster