AstraZeneca reaches astral heights

Meanwhile, the group – which produces medicines for major disease areas – is also exploring whether any of its existing drugs could be repurposed to alleviate symptoms of the virus. It is currently monitoring the effectiveness of its type-two diabetes medicine Farxiga and its blood-cancer therapy Calquence in certain hospitalised patients. At the same time, AstraZeneca and GlaxoSmithKline (GSK) are collaborating with Cambridge University to scale up Britain’s diagnostics industry at lightning speed.

With such important work in mind, it is little wonder that shares in AstraZeneca have rallied in recent weeks – reaching an all-time high when news of the Oxford agreement broke. But it also helped that the group delivered strong first-quarter results 24 hours earlier, showing how it had been bolstered indirectly by the pandemic, too – with short-term stockpiling of medications, longer prescriptions and improved treatment-regiment adherence by patients.

But such benefits are temporary and will presumably pass when the current crisis ends. It is also impossible to predict which – if any – therapies or inoculations will successfully suppress Covid-19 until trial data emerges. So it's encouraging that AstraZeneca’s efforts to tackle the virus represents just one chapter in a long and increasingly upbeat investment narrative.

Back in March 2013, then recently appointed as chief executive Pascal Soriot outlined a strategy for the group to achieve scientific leadership and to return to growth as it moved through a period of patent expiries and revenue decline. And six years later, the group has achieved those goals – propelled forward by the launch of several mega-hit oncology and respiratory treatments.

For the three months to March 2020, total revenues rose by 16 per cent to $6.4bn (£5.15bn) – the group’s sixth consecutive quarter of growth. True, of that uplift, the aforementioned stockpiling behaviour delivered a low-to-mid-single-digit percentage benefit. But, in any case, new medicines performed “especially well” – with sales here rising by 47 per cent to almost $3bn, including new-medicine growth in emerging markets of 82 per cent to $658m.

This meant that AstraZeneca’s overall product sales jumped by 15 per cent to $6.3bn, underpinned by increases across all three therapy areas – with oncology up by 33 per cent to $2.5bn, ‘new CVRM’ (cardiovascular, renal and metabolism) up 7 per cent to $1.1.bn, and respiratory and immunology up by just over a fifth to $1.6bn.

Lung cancer drug Tagrisso – which launched in 2015 – was the group’s top-selling medicine, with revenues up by more than a half to $982m. And, more recently, AstraZeneca delivered further encouraging news about the treatment: it showed “overwhelming efficacy” in the ‘Adaura’ Phase III trial in patients with a certain form of early-stage non-small cell lung cancer. This trial is, consequently, being ‘unblinded’ much earlier than expected – in just one sign of what’s to come from the group’s exciting pipeline, which includes recent approvals for other treatments such as oncology drug Imfinzi.

AstraZeneca’s quarterly operating profits increased by just over a tenth to $1.2bn; a step forward, after the same measure of earnings contracted by 14 per cent during 2019 to $23.6bn. And, reassuringly, the group reconfirmed its guidance for 2020 – it anticipates high-single-digit to low-double-digit revenue growth, and constant-currency EPS growth of a mid-to-high-teens percentage.