More on Astrazeneca
Astrazeneca Q2 results
Astrazeneca’s sales rose 13% (at CER, as are all sales numbers discussed below), with operating profit up 53% and EPS up 40%.
Strong growth in sales of Nexium more than offset Losec’s loss of sales to generics. This is very encouraging and suggests that Astrazeneca can regain some market share from generics. Nexium is a newer drug that is chemically similar to, and treats the same diseases, as Losec (also sold as Prilosec). These drugs reduce levels of stomach acid and are used to treat ulcers, gastroesophagal reflux disease and similar conditions. Sales of this class of drug (in total) rose 13% and generated 19% of Astrazeneca’s sales.
In addition, Astrazeneca’s key heart drug, Crestor (which lowers levels of “bad” cholesterol), also continued to grow strong with sales up 50% in the quarter. With little over 6% of the US market for that class of drug (statins) and growth still high it has room to grow further. It looks likely add 5%-10% to Astrazeneca’s sales.
Crestor is the biggest single growth driver but Astrazeneca does have others. Astrazeneca has produced a lot of bad news over the last year, with key new “blockbuster” drugs running into problems. This has done a lot to undermine investor confidence but the current performance and raising of expectations for the full year goes a long way to addressing this.
At 1634p Astrazeneca is on a prospective PE of 17×, but it is very cash generative and trades on a historical price/FCF of just 7.4×
Random picks: British Land | Burren Energy | Collins Stewart | Pearson | Kingfisher | Misys | Rio Tinto | Scottish & Southern Energy | Henderson | Singer & Friedlander