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For a company that has been at the forefront of the fight against Covid-19, the performance of AstraZeneca’s share price has been very disappointing.
Shares are trading at their ten-month low, currently hovering around 7,300 pence. With its full year results showing strong growth in profits and sales, investors are hoping to see an improvement in AstraZeneca’s share price.
AstraZeneca share price penalized by vaccine price
The disappointing performance may be related to AstraZeneca’s joint venture with the University of Oxford producing the vaccine at cost, along with adjustments to any possible variant, in a move that has not been replicated to the same extent. by its peers in the industry.
In PR terms, it probably seemed like a smart move at the time, but given the criticism he received about the slightly slower roll-out of vaccine production in the European Union, they would likely be forgiven for think that no good deed is right. unpunished.
The AstraZeneca / Oxford vaccine has a slightly lower efficacy rate than its peers and is not a messenger RNA vaccine unlike the Pfizer and Moderna vaccines. This caused a real storm in Europe, after the company said it needed to streamline its European operations, so it could increase the factories’ longer-term production capacity. This delayed the rollout, with AstraZeneca citing the slower EU ratification process for dose approval.
AstraZeneca seeks to strengthen its presence in all sectors
With regard to other business sectors, the sector has undergone significant rationalization as large companies face multiple challenges of lack of innovation, expiration of pharmaceutical patents and regulation. growing. AstraZeneca has been at the forefront in this area, seeking to acquire Gilead Sciences in the middle of last summer, only for that deal to fail, before acquiring Alexion late last year for $ 39 billion. dollars, as he sought to strengthen his presence. in the field of immunology.
AstraZeneca already has a strong presence in oncology (cancer) which has contributed to generate more than a third of its annual turnover. The other two are cardiovascular and renal, as well as respiratory and immunological, which have gained importance with the Alexion accord.
Rare disease research generally tends to generate high prices due to higher margins. One of Alexion’s drugs, Soliris, which treats rare blood disorders, costs around $ 600,000 per year, while Ultomiris costs a similar amount.
Profits and expenses both increase in annual results
This year’s R&D spending has risen sharply to $ 5.99 billion, while this year’s revenue figures have exceeded expectations by $ 26.6 billion, a 9% increase. That included $ 2 million in sales of Covid-19 vaccines, a figure that, over the next fiscal year, will be broken down separately.
Product sales rose 10% to $ 25.9 billion, with most products performing above expectations, although some areas underperformed. Given the pandemic, this was not unexpected, with immunology sales declining 1% due to the impact of Covid-19 on its Chinese markets.
After-tax profits were $ 3.14 billion, a decent increase from $ 1.23 billion last year, while total earnings per share rose 15% to $ 4.02 Turnover per share with expectations for 2021 of 4.75 cents to 5 dollars per share. Dividend remained unchanged at $ 2.80 per share
Minor hiccups likely won’t impact AstraZeneca share price
Some of those numbers have been lower than analysts’ expectations, but with AstraZeneca’s share price falling more than 15% in the past three months, it begs the question if these minor hiccups will matter as much.
Product sales have shown some shortfalls, but this is likely due to lower demand in some regions due to the pandemic. Revenue from Brilinta, AstraZeneca’s blood thinner product, has been insufficient, but for most other products, revenues met or exceeded expectations.
In terms of guidance for 2021, AstraZeneca said it expects total revenue to grow by a small percentage of teenagers, adding that it does not include any impact on revenues or profits from sales of the Covid-19 vaccine, with the intention of doing so. bring them back to the next quarter. The forecast also excludes any impact from its recent acquisition of Alexion, which is expected to close in the third quarter of 2021.
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