China focus as AstraZeneca reports
A falling share price and an investigation involving personnel in China take center stage as AstraZeneca releases its third-quarter report. Despite these challenges, the underlying business remains robust. Strong performance across all segments has prompted the pharmaceutical giant to raise its full-year forecast.
AstraZeneca’s sales came in at USD 13.6 billion for the third quarter of 2024, representing an impressive 21 percent growth at constant exchange rates. Both sales and profit came in above analysts’ expectations and as the company looks ahead, growth in its core business is forecast to increase by a “high teens” percentage (13–19 percent). Previously, the company envisaged that revenue and profit for the core business would grow by mid-teens for the full year 2024.
– Total Revenue and Core EPS were up 21 percent and 27 percent respectively in the third quarter, reflecting the increasing demand for our medicines across Oncology, BioPharmaceuticals and Rare Disease and supporting an upgrade to our full year 2024 guidance, AstraZeneca CEO Pascal Soriot writes in the report.
– We are highly encouraged by the broad-based underlying momentum we are seeing across our company in 2024, and growth looks set to continue through 2025, providing a solid foundation to deliver on our 2030 ambition.
Major investments in the US
One ambition is to reach sales of USD 80 billion by 2030. To get there, continued investments will be important, and in connection with the Q3 report, a US investment of as much as USD 3.5 billion was announced.
AstraZeneca plans to build a new research facility in Cambridge, Massachusetts, and a biopharmaceutical manufacturing plant in Maryland. The investment will also enhance production capacity for cell therapy and specialty drugs. The U.S. is the company’s largest market, accounting for approximately 44 percent of its sales. Currently, AstraZeneca employs about 17,800 people in the U.S., and with this investment, it expects to add around 1,000 more employees.
Analysts express optimism about the stock
Following the report, Nordea Markets analyst upgraded the recommendation on the stock by two notches, from sell to buy. The bank forecasts AstraZeneca to achieve growth of nearly 16 percent when its 2024 year-end report is released early next year. For 2025, Nordea anticipates growth of approximately 11 percent.
SEB also highlights AstraZeneca’s strong Q3 results, maintaining a buy recommendation for the stock. However, the bank notes some uncertainty surrounding the drug candidate Dato-Dxd, which is being developed in collaboration with Japan’s Daiichi Sankyo. AstraZeneca previously withdrew its market application and submitted a new one targeting patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) with mutated epidermal growth factor receptor (EGFR) who have undergone prior systemic therapies, including EGFR-targeted treatments.
Stock falls amid China investigation
Despite strong performance, AstraZeneca’s stock has faced challenges on the market this autumn. The decline accelerated following reports that China chief Leon Wang, along with two current and two former executives, is involved in an investigation in China. The probe concerns alleged violations of laws related to the import of medicines and data privacy. AstraZeneca has confirmed that Wang has been detained. The company itself has not been implicated but has stated its willingness to cooperate with authorities if required.
According to healthcare investor Intron Health, the stock may struggle to shake off the recent China news.
– This could take a long time, Intron founder Naresh Chouhan told Bloomberg News, while also noting that the market’s reaction to the news appears exaggerated.
Financially, the incident is not expected to have a significant impact, but investor sentiment has clearly worsened—albeit temporarily. Since its peak in early September, AstraZeneca shares have fallen by 20 percent and looking year to date, it sits just above break-even.
