AstraZeneca Earnings: Broad-Based Portfolio Supports Solid Gains, but Deceleration Expected

AstraZeneca reported strong second-quarter results largely in line with our projections and consistent with our fair value estimate. The results included a one-time gain from the rearrangement of the deal with Sanofi and Sobi for respiratory syncytial virus treatment Beyfortus, which led to a bolus in earnings growth that will not likely recur. Excluding COVID-19 product sales, total sales increased 16% with broad-based support, but we expect growth to decelerate as the portfolio matures. Cancer drugs increased 18%, led by Tagrisso, Imfinzi, Lynparza, and Calquence. While these drugs are still gaining new indications, we expect their growth to slow as the core indications are getting saturated. However, more recently launched cancer drug Enhertu holds significant potential for growth. Outside of cancer, cardiometabolic drug Farxiga posted 41% growth and represented the firm’s largest drug in the quarter. While we expect continued robust growth for Farxiga over the remainder of the year, the 2024-25 patent losses will create a major headwind to Astra’s growth potential. Also, respiratory drug Symbicort will likely face increased generic pressure in 2023, adding another headwind to growth.