AstraZeneca has raised its fiscal 2024 guidance for the second consecutive quarter, buoyed by strong third-quarter earnings, particularly from its cancer treatment portfolio. However, the company is facing ongoing legal challenges in China, which could affect its performance in the region despite the positive financial results.
Strong Earnings Drive Upward Revision
AstraZeneca reported better-than-expected results for the third quarter, with core earnings per share (EPS) of $2.08 (€1.96) and total revenue of $13.57 billion (€12.77 billion). Both figures showed robust year-on-year growth of 20% and 18%, respectively, at constant exchange rates (CER). This represents an improvement from the 15% and 17% growth reported in the prior quarter. The company’s oncology division was the largest contributor to these gains, with sales increasing by 22% compared to the same quarter last year.
CEO Pascal Soriot expressed confidence in AstraZeneca’s outlook, saying: “We are highly encouraged by the broad-based momentum we are seeing across our company in 2024, with growth set to continue through 2025, laying a strong foundation for our ambitions through 2030.”
Despite legal concerns in China, Soriot reaffirmed the company’s commitment to the market: “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.”
In addition to strong quarterly results, AstraZeneca recently set a goal of achieving $80 billion (€73.8 billion) in revenue by 2030, driven by growth in both existing medicines and its promising late-stage pipeline.
Outlook Raised for 2024
Following the strong performance, AstraZeneca raised its revenue growth and core EPS guidance for 2024 to the high-teens percentage range, an increase from the mid-teens growth predicted earlier. Originally, the company had forecasted low double-digit to low-teens growth.
Legal Investigations in China
Despite the company’s positive financial results, AstraZeneca is dealing with significant legal issues in China, which could cast a shadow over its stock price. On November 5, the company’s shares experienced their largest drop since 2020 after news broke that Leon Wang, AstraZeneca’s China President, was under investigation by Chinese authorities. The news sparked investor concerns, leading to a 25% drop in the company’s share price from its September peak.
The investigation reportedly involves allegations of misconduct, including improper sales practices, the smuggling of immunotherapy drugs, and insurance fraud. These legal challenges have raised concerns about the potential impact on AstraZeneca’s operations in China.
In the third quarter, sales in China increased by 15% to $1.67 billion (€1.57 billion), accounting for 12% of the company’s total revenue. However, growth in China was slower than in other regions, such as the U.S. (23% growth) and the EU (22% growth).
AstraZeneca clarified that, to its knowledge, it itself is not under investigation, although some current and former employees are. “As previously disclosed, the company is aware of a number of individual investigations by Chinese authorities into current and former AstraZeneca employees,” the company stated. “These investigations reportedly involve allegations of medical insurance fraud, illegal drug importation, and breaches of personal information. 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.”
Despite these legal challenges, AstraZeneca remains focused on its long-term growth strategy, particularly in oncology, where it sees substantial potential for expansion in the years ahead.
