£1.4bn booster results: AstraZeneca’s strong performance paves a runway for growth
Pharma giant AstraZeneca saw first half revenues rise by 48 per cent to $22.2bn, ignoring the impact of exchange rates, as the company saw growth in all divisions apart from Other Medicines.
Excluding the impact of the Alexion acquisition, exchange rates, and other one-off costs, operating profit was 71 per cent higher at £1.4bn. This reflected higher-margin treatments making up a greater proportion of sales, which offset a 33% increase in operating costs.
A brighter outlook for Covid medicines means the group now expects full year revenue to increase by a low twenties percentage, up from previous guidance in the high teens.
Core earnings per share guidance is unchanged for growth in by a mid-to-high twenties percentage.
Discussing the results this a.m., Laura Hoy, equity analyst at Hargreaves Lansdown, told City PM that “AstraZeneca’s doing better than expected, and it’s taking this opportunity to set itself up for the future.”
Hoy added: “The group’s in the process of signing new contracts for its Covid-treatments as the pandemic subsides in a step away from its pledge to sell vaccines at-cost. While the group’s said it’s covid medicines will carry a lower margin, they’ll finally start contributing to the bottom line.”
Notably the group’s expecting revenue to rise but profit guidance remained unchanged.
“The excess cash will be funnelled into the group’s ballooning research and development budget, Hoy explained.
“For big pharma this is an essential expense as they work to develop new medicine and new uses for existing treatments. The older a drug becomes, the more chance generic competition can creep in and chip away at pricing power.”
“For now it seems AZN is in good shape to weather the economic storm, exchange rate tailwinds adding a welcome boost.”
Laura Hoy
“Healthcare falls firmly into the essentials bucket, and that’s a good place to be during a downturn. However it’s worth noting that lawmakers could turn their attention back to the drug price debate in a bid to ease the cost of living crisis.”
“While Astra racked up some brownie points for its role in combatting the pandemic, that won’t insulate it if big pharma ends up in the crosshairs,” Hoy concluded.
The group announced a $0.93 interim dividend. Shares fell 3 per cent following the announcement.