- AstraZeneca executives on Friday said the coronavirus outbreak in China is likely to affect its sales for "up to a few months," reflecting growing uncertainty on how the virus' spread and the restrictions on travel imposed to contain it could impact China's economy.
- The British pharma has put a heavy focus on China, where it earns about one-fifth of its sales. While the company's expansion in the country has aided revenue growth, instability from this disease outbreak could affect AstraZeneca more than some of its peers.
- Still, other biopharma companies have cautioned investors that the spread of the virus might impact their respective China operations. Sanofi, Novo Nordisk and Merck & Co. have all acknowledged that they could see effects this year.
AstraZeneca has committed to China like no other pharmaceutical company, both in marketing its globally recognized brands as well as committing research spending to finding drugs to treat diseases common in the country. With the expansion of the virus, now named COVID-19, that commitment means AstraZeneca executives are closely watching how China responds.
In reporting its fourth-quarter and full-year 2019 earnings Friday, AstraZeneca gave revenue guidance of "high single-digit to a low double-digit percentage" growth, "depending on the impact of the COVID-19 epidemic."
In a meeting with analysts, company CFO Marc Dunoyer said, "We are presently taking into account an impact of a few months."
COVID-19 has spread worldwide, although most infections have been reported in China. The World Health Organization reported that as of Feb. 13, there have been 46,550 confirmed cases in China and 1,368 deaths, although those numbers don't yet include some 15,000 clinically diagnosed cases which were reported this week.
Companies like Merck, Novo Nordisk and Sanofi have cautioned investors that COVID-19 could affect their operations, too. Novo specifically pointed out that its China-based employees have stayed home to avoid contact with virus carriers, and hospitals have been shifting resources away from treating chronic illnesses and toward infection control.
AstraZeenca's U.S.-listed shares fell 3% to under $48 apiece in morning trading following the earnings release.
Apart from the COVID-19 caution, the big pharma also reported lower-than-expected per-share core earnings of $0.89 for the fourth quarter, a drop of 44% over the same period in 2018.
The company told investors, however, that in 2020 it expects "mid-to-high teens" per-share core earnings growth, which would put it anywhere from $4.03 to $4.17, compared with $3.50 for the full year 2019. This could also be affected by the disease outbreak.
Sales, on the other hand, grew at 15% using constant exchange rates for the full year 2019, to $24 billion. AstraZeneca's cancer franchise led by Tagrisso (osimertinib), Lynparza (olaparib) and Imfinzi (durvalumab) accounted for $9 billion.
Lynparza, an ovarian and breast cancer drug, achieved blockbuster status for the first time, hitting $1.2 billion in sales. This was offset by 11% decline for Faslodex (fulvestrant), which faced generic competition for the first time.