Oncology drugs helped boost AstraZeneca's profits by 21%. Will the company expand its portfolio?

Profits at the British-Swedish pharmaceutical giant AstraZeneca exceeded analysts’ expectations last quarter thanks to strong sales of cancer drugs and treatments for rare diseases, Reuters reports. Company executives expressed confidence that recent setbacks in clinical trials of AstraZeneca’s drug candidates have not undermined its long-term prospects.

The company's shares rose 1.7% in London trading. In the U.S., AstraZeneca shares are up 0.4%. Year-to-date, they are down 6% and 8%, respectively, on both exchanges.

In the second quarter, AstraZeneca’s adjusted earnings per share jumped 21% year-over-year to $2.63, exceeding analysts’ forecasts by nearly 6%, according to Bloomberg. Total revenue rose 6% during the same period to $15.38 billion, virtually matching market expectations ($15.39 billion).

Among the growth drivers is increased demand for the company’s key cancer drugs: Enhertu (for breast cancer treatment) and Imfinzi (for lung cancer treatment), according to Bloomberg. Reuters notes that AstraZeneca’s sales of cancer drugs and treatments for rare diseases rose 15% and 8%, respectively, year-over-year in the last quarter. At the same time, the company’s revenue in China—its second-largest market—fell by 13% due to pressure from generic drug manufacturers and regulatory changes.

AstraZeneca has established itself as a major player in the cancer drug market, according to Bloomberg. Investors are watching to see if the company can maintain that status. On Monday, the pharmaceutical giant presented encouraging data from a trial of an experimental treatment for stomach cancer and raised its annual sales forecast for a drug to treat chronic obstructive pulmonary disease to more than $5 billion. The company is also expected to soon release trial results for two key anticancer drugs: Datroway and the experimental drug camizestrant. Datroway has already been approved for the treatment of a specific type of breast cancer, but a new trial is examining its effectiveness against lung cancer. Camizestrant, however, according to analysts, has a low chance of success in treating breast cancer—following negative results for a competing drug from Roche in a similar patient group.

However, in addition to rare diseases and cancer, AstraZeneca is also seeking to expand its portfolio of drugs for the treatment of cardiovascular and metabolic diseases. To this end, the company is investing in the development of treatments for obesity. According to the latest research results, which were published in early June, AstraZeneca’s pill helped patients lose up to 11.8% of their body weight, suggesting that it could compete with existing products from Eli Lilly and Novo Nordisk in the obesity market, Bloomberg reported.

A diverse range of therapeutic areas, a rich portfolio of approved drugs, and a historically high success rate in clinical trials set AstraZeneca apart from its competitors, according to Reuters. However, recent setbacks with the neurological drug Wainua and an experimental breast cancer treatment have dampened investor optimism.

“Biology isn’t math. It isn’t that predictable,” said AstraZeneca CEO Pascal Sorio following the earnings report. “That’s exactly why we’re launching these very costly programs: to find answers to the most critical medical questions. [...] We are building a company that will not only achieve its ambitions by 2030 but will also continue to grow steadily in the next decade. “We have the scientific foundation, the development pipeline, and the team capable of making this a reality,” Sorio added.

Financial markets have begun to project the company’s recent research problems onto its entire pipeline of drugs in development, Barclays analyst James Gordon noted ahead of the report’s release, according to Bloomberg.

“A few years ago, the market was firmly convinced that Astra was ahead of other companies in clinical trial planning, given their track record of success,” he said. “However, things haven’t been quite so clear-cut in oncology lately, and now there’s also been a setback with cardiovascular drugs.”

“Growth is clearly slowing, so investors will be paying close attention to the remaining results from key oncology trials set to be released later this year,” said Adam Vetteze, an analyst at eToro.

JPMorgan analysts, however, believe the pharmaceutical giant's long-term goal of reaching $80 billion in revenue by 2030 is entirely realistic, Reuters notes.

Overall, despite the decline since the start of the year, analysts are generally optimistic about the company’s stock outlook: 18 out of 24 recommend buying the stock, according to data from Marketscreener. Four analysts advise holding the stock, and only two are bearish and recommend selling.

This article was AI-translated and verified by a human editor