AstraZeneca:2018 Sale Directions from 2017 Financial Report and Chinese Market

Global pharmaceutical enterprises have successively published their 2017 financial reports recently, and there were good and poor results: companies with full-year total revenue growing by more than 10%, and certainly, companies with revenue decline. And AstraZeneca belongs to the latter.

AstraZeneca published its 2017 financial report on February 1, 2018, with the full-year total revenue of USD 22.465 billion (down by 2%), wherein, the total drug sales were USD 20.152 billion (down by 5%). We can imagine the disappointment of investors when hearing the news, however, AstraZeneca CEO Pascal Soriot promised that it would only take one year for them to achieve growth as he saw the huge emerging market in China and several drugs with quite good growth trends in 2017.

2017 financial report of AstraZeneca

AstraZeneca published its 2017 full-year and 2017 Q4 financial reports on February 1, 2018, with the total revenue down by 2% to USD 22.465 billion compared to 2016, which the investors were clearly unsatisfactory with in the fierce competitive environment. The drug sales were down by 5% in the year, from USD 21.319 billion to USD 20.152 billion, and other external revenue (advance, share from sales, and milestone payment, etc.) was USD 2.313 billion, growing by 37%.

Table 1 Total Revenue of AstraZeneca in 2017

From the perspective of drug sales of AstraZeneca alone, the growth of 2017 Q4 was 4%, and that of 2017 Q1, Q2, and Q3 was separately -13%, -10%, and -3%. The negative growth gradually decreased from Q1 to Q3, and positive growth appeared in Q4, which was a good trend. With such trend kept, AstraZeneca would have no problem in achieving sales growth in 2018.

AstraZeneca’s CEO Pascal Soriot was full of confidence in the 2018 performance and commented on the financial report as follows: "AstraZeneca’s revenues improved over the course of the year, a sign of how our company is steadily turning a corner. Strong commercial execution helped us bring our science to more patients, making the most of our exciting pipeline. We made encouraging progress across the main therapy areas and delivered strong growth in China."

 "Alongside our CVMD medicines Brilinta (ticagrelor) and Farxiga (dapagliflozin) reaching blockbuster status, we launched our first Respiratory biologic medicine, Fasenra and new cancer medicines, Imfinzi (durvalumab) and Calquence (acalabrutinib). As well as bringing five new medicines to patients last year, we continued to find more potential uses for existing treatments, including Lynparza (olaparib) and Tagrisso (osimertinib). We remain committed to our progressive dividend policy. Our strategy is working, propelled by a strong pipeline, good sales performance and continued cost discipline."

Click to read: AstraZeneca’s drugs with potential in 2018

Emerging markets—China

From the perspective of regional situation, the Chinese market ranked top with 12% sales growth. AstraZeneca’s drug sales reached USD 2.955 billion in China in 2017, accounting for 15% of all the sales; its sales growth was 33% in China in 2017 Q4, showing a high growing trend. China has become a crucial market for the pharmaceutical enterprises. While on the old markets such as the U.S. and Europe, it has been difficult for AstraZeneca to develop there due to patent expiration or drug price pressure, plus the fierce competition, resulting in the 2017 drug sales there to decline instead of growing. Expanding the emerging markets can be a new strategic development direction for AstraZeneca.

Table 3 Regional Distribution of Drug Sales of AstraZeneca in 2017

The 5% decrease in 2017 sales might have disappointed AstraZeneca investors, but the 12% sales growth and 15% sales proportion on the Chinese market get AstraZeneca’s confidence back. AstraZeneca has recently reached cooperation with Tencent and Alibaba mainly in AI, including patient daily guidance, chronic disease prevention, and clinical observation and diagnosis, etc.

 "(China) As our second largest market, with…increasing demand for innovative medicines, we see China playing a growing role in our global plans," said AstraZeneca CEO Pascal Soriot.

References:

1. Busy AstraZeneca posts Q4 beats as executives promise light at the end of the tunnel；
2. AstraZeneca allies with Alibaba and Tencent as its China sales soar；
3. Full-Year 2017 Results(AstraZeneca)

Register as Visitor to CPhI China 2018!