AstraZeneca has raised its 2024 financial forecast for the second quarter in a row, following strong third-quarter earnings, particularly from its cancer treatment portfolio. This optimistic update comes despite ongoing legal issues in China, where the company is under investigation, creating some uncertainty for its future performance in the region.
Solid Third-Quarter Results
The British pharmaceutical company reported better-than-expected third-quarter results, with core earnings per share (EPS) reaching $2.08 (€1.96) and total revenue hitting $13.57 billion (€12.77 billion). Both figures represented robust year-on-year growth of 20% and 18%, respectively, at constant exchange rates (CER), improving on the previous quarter’s growth of 15% and 17%. The oncology division remained AstraZeneca’s primary revenue driver, with a 22% increase in sales compared to the same period last year.
AstraZeneca’s CEO, Pascal Soriot, expressed confidence in the company’s performance, saying: “We are highly encouraged by the broad-based momentum we are seeing across our company in 2024, with growth expected to continue through 2025, providing a solid foundation for our 2030 ambitions.”
Addressing the situation in China, Soriot emphasized AstraZeneca’s commitment to the country: “We take the matters in China very seriously and, if requested, will fully cooperate with the authorities. We remain committed to delivering innovative, life-changing medicines to patients in China.”
AstraZeneca had earlier set a target of $80 billion (€73.8 billion) in revenue by 2030, driven by both its established medicines and its promising late-stage pipeline.
Upward Revision of 2024 Forecast
AstraZeneca raised its 2024 revenue growth and core EPS projections to the high-teens percentage range, an upgrade from the mid-teens guidance issued last quarter. Initially, the company had forecasted a more modest low double-digit to low-teens growth rate.
Legal Troubles in China
Despite strong earnings, AstraZeneca is facing a series of legal challenges in China, which could weigh on its stock price. On November 5, shares of the company saw their steepest drop since 2020 after reports revealed that Leon Wang, AstraZeneca’s China President, was under investigation by Chinese authorities. This news triggered concerns over the potential impact of legal troubles, pushing the stock down by 25% from its all-time high in early September.
The investigation reportedly involves allegations of misconduct, including improper sales practices, smuggling of immunotherapy drugs, and insurance fraud. These legal concerns have led to some uncertainty among investors about AstraZeneca’s operations in China.
In the third quarter, AstraZeneca’s sales in China grew by 15% to $1.67 billion (€1.57 billion), representing 12% of the company’s total revenue. While this growth is positive, it was slower compared to the 23% increase in sales in the U.S. and 22% in the EU.
AstraZeneca has clarified that, to its knowledge, the company itself is not under investigation. “As previously disclosed, the company is aware of a number of individual investigations by the Chinese authorities into current and former AstraZeneca employees,” the company stated. “These investigations reportedly concern allegations of medical insurance fraud, illegal drug importation, and personal information breaches. Leon Wang, AstraZeneca’s Executive Vice President for International and President of AstraZeneca China, has been detained. If requested, AstraZeneca will fully cooperate with the Chinese authorities.”
While the legal situation in China presents a challenge, AstraZeneca remains focused on its global growth strategy, particularly in oncology, where it sees significant long-term opportunities.