AstraZeneca gets back to growth, but can it hit $40B by 2023? CEO says yes—again

AstraZeneca CEO Pascal Soriot has repeatedly said his company would finally get back on the upswing in the second half of this year, and he’s put skeptics to rest with strong third-quarter numbers. Now, he’s doubling down on an even more ambitious promise: his much-discussed 2023 revenue goal of $40 billion, which helped fend off a Pfizer -- its pharma peer takeover.

"We promised an inflection point, and we delivered it," said Soriot on the company’s Q3 earnings call.

But can AstraZeneca really hit its target of $40 billion to $41 billion in revenue by 2023 as Soriot promised back in 2014? That seems ambitious, to say the least. With $15.3 billion in sales for the first nine months of 2018, a 9% increase year over year—and tracking toward $20 billion-plus—that’s about half of what AZ would need to deliver in just five years’ time.

But the chief executive again stood by that pledge on Thursday’s call.

"The plan as we have developed to date still takes us to that kind of level, and I see no reason at this point to change this," he said. "To answer whether we will get there or not is hard because to some extent it depends on how we execute commercially" and new products and indications in its pipeline as well.

Whether AZ can reach that point will depend on a few key products. Three new treatments—Tagrisso, Imfinzi and a Bydureon autoinjector—helped drive Q3 sales to $5.27 billion, 3% above analyst expectations. China also chipped in, as it has in recent quarters.

Tagrisso sales jumped 20% sequentially to $506 million, 6% above consensus, as the lung cancer drug continues to reap the benefit from approvals in the first-line EGFR-mutated setting and expand in second-line. And as Soriot pointed out, many markets still don’t have reimbursement in first-line yet, meaning more opportunity for strong growth.

Dubbing Tagrisso AstraZeneca’s "most important drug,: UBS analyst Jack Scannell recently predicted the drug could turn in much more than the $3 billion management had predicted at peak. Instead, he saw Tagrisso to reach $5.8 billion in 2023—a big contributor toward that $40 billion goal.

Imfinzi delivered the largest sales beat this period at $187 million, a 9% margin above consensus predictions quoted by Jefferies. And AZ recently unveiled new positive data on the PD-L1, showing it could reduce the risk of death by 32% compared with standard of care in stage 3 non-small cell lung cancer patients.

Outside of oncology, diabetes med Bydureon saw sales increase by 19% in the quarter to $152 million, thanks to increasing uptake of autoinjector Bydureon BCise in the U.S. Respiratory biologic Fasenra generated $129 million in U.S. sales in the first three quarters, leading the IL-5 class in terms of new-to-brand prescriptions, said Soriot.

AZ is known for its strong presence in China compared to its Big Pharma peers. For Q3, the country offered 32% growth to $954 million. Tagrisso’s application in second-line NSCLC was just added to China’s national drug reimbursement program, and AZ now expects the add-on effect to reflect in sales in Q1 2019.

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