Sales are up in all areas, with expansion into emerging markets finally paying off.
AstraZeneca shows growth momentum and remains calm on Brexit
- Launch of new drugs sees new product sales rise by 81%.
- Investors should remain confident that strategies put in place by the management are turning the business around.
- Shares rose by over 4% on the news and we continue to maintain our low-risk ‘buy’ recommendation for investors seeking income.
The much promised turnaround is showing momentum after years struggling to fend of generic competitors to AstraZeneca’s blockbusters drugs. Products sales rose by 5% in the final quarter of 2018, taking products sales for the year as a whole to $21bn, up 4% on the previous year. This reflects past investments and the release of many products onto the market, newer product sales were up by 81%.
The management’s expansion into the emerging markets is also paying off with sales up by 12%, more specifically – sales in China were up by 28%. Along with Q4 revenues and earnings per share of $0.82, both beat the market’s expectations and helped lift the share price this morning by over 4%. However for the year as a whole, the earnings per share fell by 28% to $1.70 down to reduced externalisation revenues, increased R&D spending and impairments.
Investors should be confident the strategies put in place by management several years ago are working in turning the business around. We believe new drugs, its focus on oncology and expansion into the emerging markets will drive sales into 2019 and beyond.
Overall this is an encouraging set of results and closely reflects that of their peer GSK, both of whom are successfully meeting the challenges of generic competition finally with investments in R&D and expansion into faster growing areas of the world for healthcare needs. The dividends for the year have been maintained by AstraZeneca at $2.80 and we continue to maintain our Buy recommendation for investors seeking income and willing to accept a lower level of risk.
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