AstraZeneca pins its hopes on China
- Despite AstraZeneca plc's total revenue declining by 2% and product sales falling by 5% over 2017, the fourth quarter saw an uptick, with a growth in sales of 3% compared to the same period in 2016.
- Revenue decline was offset by a 5% growth in the year and 12% growth in the quarter across the company's growth platforms, which include respiratory, emerging markets, new oncology, new cardiovascular and metabolic drugs. The oncology unit alone shot up 19% in 2017, and growth in China rocketed to 30% in the fourth quarter. Overall, cancer meds accounted for 20% of product sales.
- AstraZeneca has given financial year 2018 guidance of a low single-digit increase for product sales and core earnings per share of $3.30 to $3.50, under constant exchange rate.
After some challenging times, CEO Pascal Soriot is "committed to returning the company to growth," completing a program that began in 2012. At long last, the work that the company has put in to reshape its pipeline does seem to be paying off.
"The momentum is building. Nine new medicines were launched in the last four years, and five of these were in 2017, the highest number in our company's history," Soriot said during a earnings call Friday. "The opportunities that we outlined in 2017 are now being realized, and we look towards product sales growth in 2018."
The growth platforms of diabetes, oncology, respiratory and the emerging markets contributed 68% of revenue in 2017, and this is anticipated to grow as the company continues to partner and divest its non-core areas. The emerging markets, and particularly China, are proving to be AstraZeneca's saving grace. Product sales growth was 8% in the emerging markets throughout 2017 and 9% in the fourth quarter.
China had a growth rate of 15% overall, with growth of 30% in the fourth quarter — its highest ever for AstraZeneca. This is despite the first three quarters being impacted by partnerships and divestments.
"Our expectation is that growth in China will remain in the low twenties, and the beginning of 2018 is already looking good," said Soriot.
"AstraZeneca is the fastest-growing multinational in China, and the second largest," said Mark Mallon, head of the company's global product and portfolio strategy. "We have a sustained commitment, and a 25-year presence in the country, in commercial, R&D, manufacturing and digital fields. Our portfolio is well-matched to the needs in China, and five of our drugs were included in the national drug list in 2017. We have invested in talent, and have a local team — our China business is run by our China team."
AstraZeneca is working with the Chinese government, and Soriot is part of a CEO forum that has been established between China and the UK. It is collaborating with Chinese industry too; this includes two deals, announced as part of the results, with Ali Health, part of Alibaba, and with Tencent.
The collaboration with Alibaba includes the use of data and artificial intelligence to support patients with chronic diseases such as diabetes. Representatives from AstraZeneca introduced the concept to the British Prime Minister, Theresa May, as part of her recent visit to China, and Soriot reported that she was very interested in the potential of technology in the delivery of care.
The Tencent deal includes a focus on the use of online tracking in the fight against counterfeit drugs. Soriot sees the benefits of digital technology in improved diagnosis and better treatment compliance, as well as more cost-effective clinical development.
In his introduction to the call, Soriot mentioned 43 "events" over 2017, which included launches, data readouts and other announcements, of which 40 were positive.
"We saw three setbacks, one of which was a real setback," he added. This refers to tralokinumab, which has failed three late stage clinical trials.
One of the others was the spectacular crash of the MYSTIC trial in mid-2017, where AstraZeneca's PD-L1 inhibitor Imfinzi (durvalumab) failed to show a progression-free survival benefit in first-line treatment of metastatic non-small cell lung cancer (NSCLC) patients when paired with its CTLA4 inhibitor tremelimumab. According to Soriot, the jury is still out on this one.
Another setback was the complete response letter issued for ZS-9 (sodium zirconium cyclosilicate) for hyperkalemia.
As in any discussion of a company with its roots in the UK, the Feb. 2 earnings call turned to Brexit, and to the move of the European Medicines Agency to Amsterdam.
"We are preparing for the transition. All of our QC processes are being duplicated so that we can release products to European standards," said Soriot.
- AstraZeneca plc Statement
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