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AstraZeneca’s (AZN - Free Report) second-quarter 2023 core earnings of $1.08 per American depositary share (ADS) beat the Zacks Consensus Estimate of 98 cents. Core earnings of $2.15 per share rose 25% year over year on a reported basis and 38% at constant exchange rates (CER).
Total revenues amounted to $11.41 billion, up 6% on a reported basis and 9% at CER. Revenues beat the Zacks Consensus Estimate of $11.13 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Rise in Product Sales
Product sales rose 5% at CER to $10.9 billion, driven by sales of its non-COVID products. Product sales beat our estimates of $10.6 billion.
Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 25%. Cardiovascular, Renal and Metabolism (“CVRM”) product sales were up 18%, while the Respiratory & Immunology (“R&I”) segment rose 14%. Vaccines & Immune (“V&I”) Therapies sales declined 71%. Rare disease product sales were up 10%. Sales of other medicines declined 23%.
During the quarter, AstraZeneca recorded collaboration revenues of $193 million. Alliance revenues were up more than 200% year over year to $341 million, driven by continued growth in revenues from partnered medicines.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.49 billion, up 10% year over year on strong demand as a first line and adjuvant treatment. In China, sales benefitted from rising patient demand, which offset the National reimbursement drug list (NRDL) renewal price reductions. Though Tagrisso sales met the Zacks Consensus Estimate, it slightly missed our model estimate of $1.55 billion.
Imfinzi generated sales of $1.08 billion in the quarter, up 58% year over year, driven by increased use in biliary tract, liver and lung cancers. Product sales from Imjudo were included in the Imfinzi line. Imfinzi sales beat the Zacks Consensus Estimate and our estimate of $922 million and $843 million, respectively.
Lynparza product revenues rose 9% year over year to $717 million, owing to usage growth in all approved cancer indications. Increased use in first-line HRD-positive ovarian cancer and higher uptake for an expanded label in breast and prostate cancers boosted sales in Europe. However, Lynparza sales missed the Zacks Consensus Estimate and our estimate of $756 million and $845 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . The profit-sharing deal between AstraZeneca and Merck was inked in 2017. AstraZeneca & Merck’s Lynparza is approved for four cancer types, namely ovarian, breast, prostate and pancreatic. In addition to Lynparza, the deal included Koselugo.
Calquence generated sales of $653 million in the quarter, up 34% year over year, benefiting from the increased new patient market share. The drug sales beat the Zacks Consensus Estimate of $632 million but missed our model estimate of $689 million.
Sales of AstraZeneca’s legacy cancer drugs, such as Iressa, Faslodex, Arimidex and Casodex declined during the quarter. However, sales of Zoladex rose 5% in the quarter.
In CVRM, Farxiga recorded product sales of $1.51 billion in the quarter, up 41% year over year, reflecting volume growth across all regions and growth of the SGLT2 inhibitor class in general. The label expansion approvals for heart failure with reduced ejection fraction and chronic kidney disease indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing growth in Emerging Markets. Farxiga sales beat the Zacks Consensus Estimate of $1.38 billion and our model estimate of $1.42 billion.
Brilinta/Brilique sales were $331 million in the reported quarter, down 3% year over year, due to an unfavourable gross-to-net adjustment. While sales in Europe were affected by clawbacks, sales declined in Canada due to generic erosion.
In R&I, Symbicort sales rose 1% in the quarter to $600 million. Pulmicort sales rose 13% to $124 million. The upside in both drugs were driven by strong growth in Emerging Markets.
Fasenra recorded sales of $406 million in the quarter, up 16% year over year, driven by increased market share performance in Europe and the United States due to market leadership. Fasenra sales beat the Zacks Consensus Estimate of $396 million but missed our model estimate $417 million, respectively.
AstraZeneca’s new triple combo COPD treatment Breztri recorded sales of $163 million, up 79% year over year. The reported figure beat the Zacks Consensus Estimate and our model estimate of $144 million and $139 million, respectively.
New lupus drug, Saphnelo recorded sales of $68 million in the quarter, compared with $47 million in the previous quarter.
In the Rare Disease portfolio, which was added following the 2021 Alexion acquisition, Soliris recorded sales of $814 million, down 19% year over year due to conversion to Ultomiris. Ultomiris and Strensiq sales were $713 million and $300 million, up 66% and 25%, respectively, driven by geographic expansions in new markets.
In Other Medicines, sales of Nexium declined 23% to $248 million.
In Vaccines & Immune Therapies, the company did not generate any revenues from its COVID-19 vaccine Vaxzevria or its COVID-19 antibody cocktail medicine Evusheld. AstraZeneca’s RSV antibody Synagis recorded $87 million as revenues, which were up 16% year over year, driven by an early start to RSV season in Japan.
Profit Discussion
AstraZeneca’s core gross margin of 82.4% was up 2 percentage points at CER as the dilutive effect from profit-sharing arrangements were offset by a positive mix due to increased contribution from oncology and rare disease medicines. COVID-19 medications, which were dilutive to gross margin, declined substantially in the quarter, thereby improving the company’s gross margin mix. Core selling, general and administrative expenses increased 8% to $3.30 billion.
Core research and development expenses rose 8% to $2.57 billion. Core operating profit were up 39% to $4.29 billion in the quarter. The core operating margin was 37.6% in the quarter, up 8 percentage points at CER.
Maintains 2023 Guidance
Management maintained its financial guidance for 2023. AstraZeneca expects total revenues to increase in the low-to-mid single-digit percentage in 2023 at CER including its COVID products. Excluding the COVID products, total revenues are expected to increase in the low double-digit percentage.
Core earnings per share are expected to increase in the high single-digit to low double-digit percentage in 2023.
Foreign exchange is expected to have a low single-digit percentage adverse impact on total revenues and on core EPS in 2023.
Core operating expenses are expected to increase by a low-to-mid single-digit percentage.
Management expects China sales to return to growth and increase by a low single-digit percentage throughout 2023.
New Deal with Pfizer
In a separate press release, AstraZeneca announced that it has entered into a definitive agreement with Pfizer (PFE - Free Report) to acquire a portfolio of preclinical rare disease gene therapies. Per the terms of agreement, AstraZeneca will purchase and license the assets of Pfizer’s early-stage rare disease gene therapy portfolio for a total consideration of up to $1 billion. In addition, Pfizer will be eligible to receive tiered royalties on potential sales. AstraZeneca expects to complete this acquisition from Pfizer by the end of third-quarter 2023.
Our Take
AstraZeneca’s second-quarter results were impressive as it beat estimates for earnings and sales. Excluding COVID-19 products, sales growth across all units were in double-digit figures. During the second quarter, the company did not record any sales from its COVID-19 medications. The company also maintained its 2023 outlook despite declining sales of its COVID products.
Shares of AstraZeneca were up 4.4% in pre-market trading on Jul 28 due to the better-than-expected Q2 earnings results despite declining sales from COVID-19 therapies.
In the year so far, the stock has increased 0.5% compared with the industry’s 1.8% rise.
Image Source: Zacks Investment Research
AstraZeneca noted that product sale improvement in China can be attributed to increased patient demand, which is expected to offset the pricing pressure associated with NRDL and VBP programs.
In the past 30 days, estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.73. During the same period, the earnings estimates per share for 2024 have risen from $11.01 to $11.28. Shares of J&J are down 1.7% in the year-to-date period.
Earnings of J&J beat estimates in each of the last four quarters, witnessing an average earnings surprise of 5.58%. In the last reported quarter, J&J’s earnings beat estimates by 7.28%.
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AstraZeneca (AZN) Q2 Earnings & Sales Beat, Nil COVID Sales
AstraZeneca’s (AZN - Free Report) second-quarter 2023 core earnings of $1.08 per American depositary share (ADS) beat the Zacks Consensus Estimate of 98 cents. Core earnings of $2.15 per share rose 25% year over year on a reported basis and 38% at constant exchange rates (CER).
Total revenues amounted to $11.41 billion, up 6% on a reported basis and 9% at CER. Revenues beat the Zacks Consensus Estimate of $11.13 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Rise in Product Sales
Product sales rose 5% at CER to $10.9 billion, driven by sales of its non-COVID products. Product sales beat our estimates of $10.6 billion.
Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 25%. Cardiovascular, Renal and Metabolism (“CVRM”) product sales were up 18%, while the Respiratory & Immunology (“R&I”) segment rose 14%. Vaccines & Immune (“V&I”) Therapies sales declined 71%. Rare disease product sales were up 10%. Sales of other medicines declined 23%.
During the quarter, AstraZeneca recorded collaboration revenues of $193 million. Alliance revenues were up more than 200% year over year to $341 million, driven by continued growth in revenues from partnered medicines.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.49 billion, up 10% year over year on strong demand as a first line and adjuvant treatment. In China, sales benefitted from rising patient demand, which offset the National reimbursement drug list (NRDL) renewal price reductions. Though Tagrisso sales met the Zacks Consensus Estimate, it slightly missed our model estimate of $1.55 billion.
Imfinzi generated sales of $1.08 billion in the quarter, up 58% year over year, driven by increased use in biliary tract, liver and lung cancers. Product sales from Imjudo were included in the Imfinzi line. Imfinzi sales beat the Zacks Consensus Estimate and our estimate of $922 million and $843 million, respectively.
Lynparza product revenues rose 9% year over year to $717 million, owing to usage growth in all approved cancer indications. Increased use in first-line HRD-positive ovarian cancer and higher uptake for an expanded label in breast and prostate cancers boosted sales in Europe. However, Lynparza sales missed the Zacks Consensus Estimate and our estimate of $756 million and $845 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . The profit-sharing deal between AstraZeneca and Merck was inked in 2017. AstraZeneca & Merck’s Lynparza is approved for four cancer types, namely ovarian, breast, prostate and pancreatic. In addition to Lynparza, the deal included Koselugo.
Calquence generated sales of $653 million in the quarter, up 34% year over year, benefiting from the increased new patient market share. The drug sales beat the Zacks Consensus Estimate of $632 million but missed our model estimate of $689 million.
Sales of AstraZeneca’s legacy cancer drugs, such as Iressa, Faslodex, Arimidex and Casodex declined during the quarter. However, sales of Zoladex rose 5% in the quarter.
In CVRM, Farxiga recorded product sales of $1.51 billion in the quarter, up 41% year over year, reflecting volume growth across all regions and growth of the SGLT2 inhibitor class in general. The label expansion approvals for heart failure with reduced ejection fraction and chronic kidney disease indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing growth in Emerging Markets. Farxiga sales beat the Zacks Consensus Estimate of $1.38 billion and our model estimate of $1.42 billion.
Brilinta/Brilique sales were $331 million in the reported quarter, down 3% year over year, due to an unfavourable gross-to-net adjustment. While sales in Europe were affected by clawbacks, sales declined in Canada due to generic erosion.
In R&I, Symbicort sales rose 1% in the quarter to $600 million. Pulmicort sales rose 13% to $124 million. The upside in both drugs were driven by strong growth in Emerging Markets.
Fasenra recorded sales of $406 million in the quarter, up 16% year over year, driven by increased market share performance in Europe and the United States due to market leadership. Fasenra sales beat the Zacks Consensus Estimate of $396 million but missed our model estimate $417 million, respectively.
AstraZeneca’s new triple combo COPD treatment Breztri recorded sales of $163 million, up 79% year over year. The reported figure beat the Zacks Consensus Estimate and our model estimate of $144 million and $139 million, respectively.
New lupus drug, Saphnelo recorded sales of $68 million in the quarter, compared with $47 million in the previous quarter.
In the Rare Disease portfolio, which was added following the 2021 Alexion acquisition, Soliris recorded sales of $814 million, down 19% year over year due to conversion to Ultomiris. Ultomiris and Strensiq sales were $713 million and $300 million, up 66% and 25%, respectively, driven by geographic expansions in new markets.
In Other Medicines, sales of Nexium declined 23% to $248 million.
In Vaccines & Immune Therapies, the company did not generate any revenues from its COVID-19 vaccine Vaxzevria or its COVID-19 antibody cocktail medicine Evusheld. AstraZeneca’s RSV antibody Synagis recorded $87 million as revenues, which were up 16% year over year, driven by an early start to RSV season in Japan.
Profit Discussion
AstraZeneca’s core gross margin of 82.4% was up 2 percentage points at CER as the dilutive effect from profit-sharing arrangements were offset by a positive mix due to increased contribution from oncology and rare disease medicines. COVID-19 medications, which were dilutive to gross margin, declined substantially in the quarter, thereby improving the company’s gross margin mix. Core selling, general and administrative expenses increased 8% to $3.30 billion.
Core research and development expenses rose 8% to $2.57 billion. Core operating profit were up 39% to $4.29 billion in the quarter. The core operating margin was 37.6% in the quarter, up 8 percentage points at CER.
Maintains 2023 Guidance
Management maintained its financial guidance for 2023. AstraZeneca expects total revenues to increase in the low-to-mid single-digit percentage in 2023 at CER including its COVID products. Excluding the COVID products, total revenues are expected to increase in the low double-digit percentage.
Core earnings per share are expected to increase in the high single-digit to low double-digit percentage in 2023.
Foreign exchange is expected to have a low single-digit percentage adverse impact on total revenues and on core EPS in 2023.
Core operating expenses are expected to increase by a low-to-mid single-digit percentage.
Management expects China sales to return to growth and increase by a low single-digit percentage throughout 2023.
New Deal with Pfizer
In a separate press release, AstraZeneca announced that it has entered into a definitive agreement with Pfizer (PFE - Free Report) to acquire a portfolio of preclinical rare disease gene therapies. Per the terms of agreement, AstraZeneca will purchase and license the assets of Pfizer’s early-stage rare disease gene therapy portfolio for a total consideration of up to $1 billion. In addition, Pfizer will be eligible to receive tiered royalties on potential sales. AstraZeneca expects to complete this acquisition from Pfizer by the end of third-quarter 2023.
Our Take
AstraZeneca’s second-quarter results were impressive as it beat estimates for earnings and sales. Excluding COVID-19 products, sales growth across all units were in double-digit figures. During the second quarter, the company did not record any sales from its COVID-19 medications. The company also maintained its 2023 outlook despite declining sales of its COVID products.
Shares of AstraZeneca were up 4.4% in pre-market trading on Jul 28 due to the better-than-expected Q2 earnings results despite declining sales from COVID-19 therapies.
In the year so far, the stock has increased 0.5% compared with the industry’s 1.8% rise.
Image Source: Zacks Investment Research
AstraZeneca noted that product sale improvement in China can be attributed to increased patient demand, which is expected to offset the pricing pressure associated with NRDL and VBP programs.
AstraZeneca PLC Price
AstraZeneca PLC price | AstraZeneca PLC Quote
Zacks Rank & Stocks to Consider
Currently, AstraZeneca has a Zacks Rank #3 (Hold). A better-ranked stock in the overall healthcare sector include J&J (JNJ - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.73. During the same period, the earnings estimates per share for 2024 have risen from $11.01 to $11.28. Shares of J&J are down 1.7% in the year-to-date period.
Earnings of J&J beat estimates in each of the last four quarters, witnessing an average earnings surprise of 5.58%. In the last reported quarter, J&J’s earnings beat estimates by 7.28%.