Anglo-Swedish drugs giant AstraZeneca expects revenue from its Covid-19 medicines to fall by a fifth this year as demand wanes for its vaccine.
The London-listed business has reiterated that it expected sales of Vaxzevria – more commonly known as the Oxford/AstraZeneca vaccine – will decline later in 2022.
It comes despite sales of the vaccine rising around fourfold in the first quarter of this year compared to the same period 12 months ago, to more than £875million ($1.1billion).
But in Europe sales were down by 40 per cent. Shares were broadly flat following the announcement.
Anglo-Swedish drugs giant AstraZeneca expects revenue from its Covid-19 medicines to fall by a fifth this year as demand wanes for its life-saving vaccine
A year ago the continent took four in five Vaxzevria vaccines produced as countries there were among the first to roll it out. The shot was AstraZeneca’s second best-selling product in 2021 with sales of $3.9billion.
While sales of the vaccine are expected to fall this year, this will be partially offset by Astra’s new Covid treatment Evusheld. It was approved in the UK last month for use with patients with poor immune responses.
The antibody treatment, which generated $469million in first-quarter revenue, came in just short of consensus expectations of $480million.
Astra’s first quarter revenue beat expectations and rose 60 per cent to £9.1billion ($11.4billion) ignoring the impact of exchange rates. This was driven by growth in most categories, the contribution of Alexion’s portfolio of products and Covid-vaccine contracts.
The pharma giant said that it had sold products for just under £8.8billion ($11billion) during the quarter, 51 per cent higher than the same period a year ago.
Cash profits (EBITDA) fell 16 per cent to $2.2billion, lower than market expectations. This reflected costs associated with the Alexion acquisition, including a $1.2billion charge related to the revaluation of Alexion’s inventory.
Astra bought Alexion in July last year, so its medicines were not counted in Astra’s results this time a year ago.
A year ago the continent took eight in 10 Vaxzevria vaccines produced as countries there were among the first to roll it out. The shot was AstraZeneca’s second best-selling product in 2021 with sales of $3.9 billion
It will have 1,500 staff and serve as Alexion’s new headquarters.
‘Today’s announcement is a milestone moment following the acquisition of Alexion in July 2021,’ said chief executive Pascal Soriot.
‘Our combined company has already successfully leveraged internal scientific synergies, and this move will act as a catalyst for even more external collaboration and innovation.’
‘The move will provide access to some of the most innovative partners in academia and biotech, offering opportunities to accelerate our growth and collaborate with like-minded organisations as we continue to push the boundaries of science to deliver advances for patients.’
A 36 per cent increase in research and development costs also contributed to the profit decline.
The group continues to expect full year revenue to rise in the high teens and earnings per share to increase by a mid-to-high twenties percentage.
Separately the business announced that it will open a new research and development site in Cambridge, Massachusetts to be completed in 2026.
Commenting on the results Keith Bowman, an Investment Analyst at interactive investor said: ‘Pharma giant AstraZeneca has delivered robust first quarter results, pushed along by growth in cancer treatments. Total quarterly revenue rose 60 per cent to $11.39billion, with core earnings per share of $1.89 surpassing analyst estimates of nearer to $1.70.
‘Oncology related product sales rose 18 per cent to $3.38billion, while rare disease treatments adjusted for its previous Alexion takeover added a further 7 per cent sales growth. Full-year earnings and revenue guidance has been reiterated and plans for a new strategic research and development centre in Cambridge, Massachusetts’ announced.
‘In all, ongoing investment costs in drug development continue to weigh. The previous purchase of Alexion at what was considered a full price is also yet to be fully justified and has elevated net debt.
‘On the upside, drug innovation remains high.’
Meanwhile, the company pared back its expectations for China, where it has an outsized presence. Last year, the country accounted for about 16% of AstraZeneca’s total revenue.
The Anglo-Swedish drugmaker said it expected to see sales decline by a mid-single-digit percentage in 2022 in China, in part due to discounts it has agreed to secure a place on China’s National Reimbursement Drug List (NRDL) for various medicines.
The country has also recently put in place COVID lockdowns, which analysts worry could affect sales in the second quarter.
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