More on Astrazeneca
Astrazeneca Q1 2006 results
Astrazeneca continued growth very similar to last year’s (sales up 12% at CER) on much the same growth drivers. Its fastest growing drugs were:
- Schizophrenia and bipolar disorder (manic depression) drug Seroquel. Sales +$174m.
- Heart drugs Crestor and Selonken. Sales +$114m and $48m respective.
- Breast cancer drug Arimidex. Sales +$79m.
- Ulcer drug Nexium. Sales +$134m.
Of these the growth in Nexium sales was largely offset by the decline in the sales of its off-patent predecessor, Losec/Prilosec as the latter continues to lose market share to generics. Nonetheless the combined sales of the two drugs rose by £52m.
The growth in Crestor is good, but not very strong given that it has tended to be regarded as Astrazeneca’s key blockbuster drug.
Unsurprising given the sales growth (and the high level of fixed costs normal to the sector), operating margin improved to 32%, a spectacular five percentage points even after stripping out the positive effect of exchange rate movements.
Astrazeneca’s short term pipeline is dominated by variants of some of its existing best selling drugs and approval to market them for treating more diseases. New applications of Crestor and Nexium as well as lung cancer drug Iressa are in stage III clinical trials, as well as a number of new drugs.
This pipeline, together with the continuing high growth of several of its already marketed major drugs, gives Astrazeneca comparatively low risk medium term growth, albeit likely to slow over the course of this year and onwards. This makes the 16× prospective PE and 2.4% yield look fairly attractive to those looking for a reasonably safe buy in the sector. As always the real growth opportunities in pharmaceuticals lie in the smaller companies.
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