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AstraZeneca (AZN) Q4 Earnings Beat, COVID Vaccine Drives Sales

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AstraZeneca’s (AZN - Free Report) fourth-quarter 2021 core earnings of 84 cents per American depositary share (“ADS”) beat the Zacks Consensus Estimate of 77 cents. Core earnings of $1.67 per share rose 56% year over year on a reported basis and 74% at constant exchange rates (“CER”).

Total revenues, including revenues of the rare disease drugmaker Alexion acquired in July 2021, were up 62% on a reported basis and 63% at CER to $12.0 billion in the quarter, driven by higher product sales and contribution from its COVID-19 vaccine. Revenues beat the Zacks Consensus Estimate of $11.04 billion.

All growth rates mentioned below are on a year-over-year basis and at CER.

Product Sales Rise

Product sales rose 65% at CER to $11.5 billion. Collaboration revenues were $513 million. Collaboration revenues included a $400 million sales milestone payment for Lynparza, $2 million for roxadustat and $59 million for Enhertu (from partner Daiichi Sankyo).

Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 21%. CVRM product sales were up 8%, while the Respiratory & Immunology segment gained 3%. Rare disease product sales were up 11%. Sales of other medicines declined 14%.

Sales in Detail

AstraZeneca’s COVID-19 vaccine generated $1.78 billion in revenues. AstraZeneca’s new COVID-19 antibody cocktail medicine, Evusheld generated $85 million in sales of which $66 million came from Europe and $19 million from Emerging Markets. There were no Evusheld sales recorded in the United States.

In December last year, the FDA had granted Emergency Use Authorization (EUA) to Evusheld (formerly AZD7442) for pre-exposure prophylaxis (prevention) of COVID-19 in some individuals.

In Oncology, Lynparza product revenues rose 28% year over year to $629 million due to the rise in use in ovarian, breast and prostate cancer in the United States. Meanwhile, additional reimbursements, increasing BRCAm-testing rates and successful launch in first-line ovarian cancer in Europe also boosted sales. The drug is the leading PARP-inhibitor drug in the United States.

AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . The profit-sharing deal between Merck and AstraZeneca was formed in 2017. In addition to Lynparza, the deal included Koselugo.

AstraZeneca & Merck’s Lynparza is approved for four cancer types — ovarian, breast, prostate and pancreatic. Lynparza is also being evaluated in an earlier-line setting for the approved cancer indications as well some other cancer types

Tagrisso recorded sales of $1.31 billion, up 15% year over year on strong demand for use as a first-line and adjuvant treatment, partially offset by lower rates of new patient diagnoses due to the new wave of Omicron-related infections in the United States.

Imfinzi generated sales of $634 million in the quarter, up 15% year over year driven by increased demand for ES-SCLC indication. COVID-19 continued to hurt lung cancer diagnoses rates, mainly in the United States.

Calquence generated $395 million in the quarter compared with $354 million in the previous quarter. Another new drug, Koselugo generated sales of $34 million in the quarter.

Sales of AstraZeneca’s legacy cancer drugs — Iressa, Arimidex, Faslodex and Casodex — declined during the quarter. However, sales of Zoladex were up 7%.

In CVRM, Brilinta/Brilique sales were $348 million in the reported quarter, down 4% year over year, primarily due to the impact of COVID-19 (reflecting fewer elective procedures) and pricing pressure from the VBP (volume-based procurement) program in China.

Farxiga recorded product sales of $848 million in the quarter, up 46% year over year, reflecting SGLT2 inhibitor class growth and volume growth across all regions. The recent label expansion approvals for heart failure with reduced ejection fraction (HFrEF) and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. The inclusion of Farxiga on the NRDL in China boosted sales in emerging markets.

Bydureon sales decreased 25% to $91 million. Sales of older CVRM medicines, Crestor and Seloken/Toprol-XL declined 13% and 2%, respectively, in the quarter.

In Respiratory & Immunology, Symbicort sales were flat in the quarter at $681 million. Pulmicort sales declined 34% to $248 million.

Fasenra recorded sales of $357 million in the quarter, up 27% year over year, reflecting a recovery in new patient starts, mainly in the United States and Europe.

AstraZeneca’s new triple combo COPD treatment, Breztri recorded sales of $73 million in the quarter compared with $47 million in the previous quarter.

In the Rare Disease portfolio added with Alexion’s acquisition, Soliris recorded sales of $1.08 billion, representing a pro-rata increase of 6% year over year as growing use in neurology indications, generalized myasthenia gravis (gMG) and neuromyelitis optica spectrum disorder (NMOSD) was offset by patient conversion to Ultomiris in paroxysmalnocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS) indications. Ultomiris and Strensiq sales were $391 million and $219 million, up 26% and 18%, respectively.

Profit Discussion

AstraZeneca’s core gross margin of 74.3% was down 2 percentage points at CER. Core selling, general and administrative (SG&A) expenses increased 18% to $3.37 billion.

Core research and development (R&D) expenses rose 40% to $2.4 billion. Core operating profit rose 94% to $3.32 billion in the quarter. The core operating margin rose 5 percentage points to 27.6% in the quarter.

2021 Results

Full-year 2021 sales rose 41% on a reported basis and 38% at CER to $37.42 billion, including COVID-19 vaccine revenues. Revenues beat the Zacks Consensus Estimate of $36.65 billion.

Core earnings per share for 2021 were $5.29 per share, which were within the guided range of $5.05 and $5.40 per share. Core earnings per share rose 32% year over year on a reported basis and 37% at constant exchange rates (“CER”). Core earnings were $2.65 per American depositary share (“ADS”), which beat the Zacks Consensus Estimate of $2.58.

2022 Guidance Issued

AstraZeneca expects total revenues to increase in high-teens percentage in 2022. The guidance includes the full-year contribution from the COVID-19 vaccine.

AstraZeneca expects a decline in its total revenues from COVID-19 medicines in 2022 by a low-to-mid-twenties percentage, with an expected decline in sales of the COVID-19 vaccine being partially offset by growth in Evusheld sales

Core earnings are expected to increase at a mid-to-high twenties percentage in 2022.

Our Take

AstraZeneca’s fourth-quarter results were strong as it beat estimates for both earnings and sales. Product sales growth was driven by its COVID-19 vaccine and higher sales of newer medicines across Oncology and CVRM units like Tagrisso and Farxiga, which offset some negative impacts from the pandemic and slower sales growth in China. Sales in China were hurt due to pricing pressure associated with the National Reimbursement Drug List (NRDL) and volume-based procurement (VBP) programs in the second half of the year. The rare disease drugs added following the Alexion acquisition also aided sales growth.

Shares of AstraZeneca were up more than 3% in pre-market trading on Feb 10, following the better-than-expected fourth-quarter results. So far this year, the company’s shares have declined 1.8% compared with a decrease of 3.1% for the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

In 2021, AstraZeneca witnessed double-digit growth in all major regions, including Emerging Markets despite the issues in China. It also made the transformative acquisition of Alexion in the year. AstraZeneca has also made significant progress with its late-stage pipeline, reporting 14 positive phase III trial results across nine medicines in 2021. Two key medicines, Evusheld and asthma drug, Tezspire were approved in 2021. Its COVID-19 vaccine generated $3.9 billion in sales in 2021.

Zacks Rank & Stocks to Consider

AstraZeneca currently carries a Zacks Rank #3 (Hold).

AstraZeneca PLC Price, Consensus and EPS Surprise

AstraZeneca PLC Price, Consensus and EPS Surprise

AstraZeneca PLC price-consensus-eps-surprise-chart | AstraZeneca PLC Quote

Some better-ranked large drug stocks are Pfizer (PFE - Free Report) and GlaxoSmithKline (GSK - Free Report) . While Pfizer has a Zacks Rank of 1 (Strong Buy), Glaxo has a Zacks Rank #2 (Buy).

Pfizer’s stock has risen 54.9% in the past year. The Zacks Consensus Estimate for Pfizer’s 2022 earnings has gone up from $4.80 to $6.41 while the same for 2023 has increased from $4.50 to $4.93 over the past 60 days.

Pfizer’s earnings performance has been mixed, with the company exceeding earnings expectations in all the last four quarters. PFE has a four-quarter earnings surprise of 19.8%, on average.

Glaxo’s stock has risen 32.5% in the past year. Estimates for Glaxo’s 2022 earnings have gone up from $3.25 to $3.29 per share over the past 60 days.

Glaxo’s earnings performance has been mixed with the company exceeding earnings expectations in two of the last four quarters, missing in one and posting in-line results in one. Glaxo has a four-quarter earnings surprise of 15.3%, on average.

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