AstraZeneca PLC (AZN) Q4 2024 Earnings Call Highlights: Strong Revenue Growth Amidst Challenges

GuruFocus.com
07 Feb
  • Total Revenue Growth: Up 21% for the full year 2024.
  • Core EPS Growth: Increased by 19% in 2024.
  • Core Operating Expense Growth: Increased by 14% in 2024.
  • China Revenue Growth: Increased by 11% for the full year 2024.
  • Emerging Markets Growth: Up 22% in 2024.
  • Product Sales Growth: Increased by 19% for the full year 2024.
  • Alliance Revenue Growth: Increased by 55% in 2024.
  • Collaboration Revenue Growth: Increased by 54% in 2024.
  • Core Product Sales Gross Margin: 81.2% in 2024.
  • Core R&D Expense Growth: Increased by 19% in 2024.
  • Core SG&A Costs Growth: Increased by 11% in 2024.
  • Net Cash Flow from Operating Activities: Increased by $1.5 billion in 2024.
  • CapEx: $2.2 billion in 2024.
  • Net Debt: Increased by $2.1 billion to $24.6 billion.
  • Dividend Increase: Full year 2024 dividend increased to $3.10 per share.
  • Oncology Revenue: $22.4 billion in 2024, up 24%.
  • BioPharmaceuticals Revenue: $21.9 billion in 2024, up 21%.
  • Rare Disease Revenue: $8.8 billion in 2024, up 16%.
  • Warning! GuruFocus has detected 2 Warning Sign with AZN.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • AstraZeneca PLC (NASDAQ:AZN) reported a strong financial performance in 2024, with total revenue up 21% and core EPS up 19%, indicating robust company momentum.
  • The company achieved significant pipeline advancements, with nine high-value pivotal trials representing over $5 billion in non-risk-adjusted peak revenue.
  • AstraZeneca PLC (NASDAQ:AZN) has eight new medicines approved to date, including the recent approval of Datroway, contributing to its goal of 20 new medicines by 2030.
  • The company experienced strong growth across all therapy areas and key geographies, with emerging markets showing a 22% growth in 2024.
  • AstraZeneca PLC (NASDAQ:AZN) anticipates a catalyst-rich period in 2025, with high-value trial readouts expected for several existing medicines and new molecular entities (NMEs).

Negative Points

  • AstraZeneca PLC (NASDAQ:AZN) is facing ongoing investigations in China regarding suspected unpaid importation taxes, which could result in significant fines.
  • The company experienced a 3% decline in Q4 2024 China revenues, primarily due to year-end hospital ordering dynamics and lower demand for respiratory products.
  • AstraZeneca PLC (NASDAQ:AZN) anticipates headwinds in 2025 from the inclusion of several medicines in China's Volume-Based Procurement (VBP) program, impacting revenue.
  • The company expects a 60 to 70 basis points decline in product sales gross margin in 2025 due to factors like the Inflation Reduction Act (IRA) in the US and VBP in China.
  • AstraZeneca PLC (NASDAQ:AZN) faces challenges in gaining market access for new products like Airsupra, which has seen slower-than-expected uptake due to access issues.

Q & A Highlights

Q: How did AstraZeneca's revenue in China evolve during Q4 2024, and what is the outlook for 2025 considering the ongoing investigations and potential VBP inclusion? A: Pascal Soriot, CEO, explained that the Q4 decline was primarily due to hospital ordering dynamics and a mild winter affecting respiratory products. For 2025, despite headwinds from VBP inclusion for several medicines, AstraZeneca expects continued growth in China. The company is cooperating with the government on the investigations, and any potential fines would be based on avoided import duties.

Q: What is the impact of the Part D redesign on AstraZeneca's 2025 outlook, and which products are most affected? A: David Fredrickson, EVP of Oncology, noted that the Part D redesign primarily affects the oral Oncology portfolio, with manageable impacts due to improved adherence and lower free drug utilization. The redesign is included in the company's guidance, and AstraZeneca anticipates continued growth opportunities in 2025 to offset these headwinds.

Q: Can you provide an update on the market share for key drugs in China and any notable changes? A: Iskra Reic, EVP of International, stated that there have been no major changes in market share for key drugs like Tagrisso. The decline in Farxiga's market share was due to hospital capping, but it is expected to recover. Overall, AstraZeneca's market share remains stable.

Q: What are AstraZeneca's plans for the oral PCSK9 inhibitor, and how does it differentiate from competitors? A: Sharon Barr, EVP of BioPharmaceuticals R&D, highlighted that the oral PCSK9 inhibitor, AZD0780, is a true small molecule with no food effect, unlike competitors. It is well-suited for monotherapy and combination use, with a favorable PK profile. The company is planning pivotal studies but has not yet commented on cardiovascular outcomes trials.

Q: How does AstraZeneca plan to address the competitive threat from GSK's depemokimab in the asthma biologics market? A: Ruud Dobber, EVP of BioPharmaceuticals, emphasized that while convenience is important, efficacy remains the key factor for physicians and patients. Fasenra's strong efficacy and market leadership position it well against competition. AstraZeneca is also expanding its respiratory portfolio in China and other emerging markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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