Nearly a decade after AstraZeneca fended off a hostile takeover approach from US rival Pfizer, the British drug firm has overtaken the Viagra maker in terms of market value, marking a significant moment in its turnaround – and for UK plc.
In a week when AstraZeneca and Britain’s second-biggest pharma firm GSK release their latest quarterly results and the main industry body, the Association of the British Pharmaceutical Industry holds its annual conference, all eyes will be on what pharma executives say about the UK as a place to operate and invest in.
GSK’s chief executive, Emma Walmsley, recently said that life sciences were at a “tipping point,” saying the UK needed to reverse the decline in clinical trials, speed up approvals of new drugs and deploy the latest medicines more quickly.
Her counterpart at AstraZeneca, Pascal Soriot, also took a shot at the business climate, saying less favourable tax rates had prompted the firm to build a new factory in Ireland rather than the UK. The industry is locked in a battle with the government over the soaring rebates it pays to the National Health Service, which are designed to limit the NHS’s medicines bill.
Soriot has completely rebuilt AstraZeneca’s drug portfolio in recent years, including the lung cancer drug Tagrisso, leukaemia drug Calquence and Farxiga for diabetes. GSK is also in the process of revamping its pipeline, and has become a more focused pharma and vaccines business after the spin-off of its consumer arm Haleon last summer.
After positive results in clinical trials across cancer, metabolic and rare disease treatments, AstraZeneca’s share price has risen 19% in the past year and 140% in the last five years, valuing the company at nearly £189bn. This compares with Pfizer’s $227bn (£182bn).
AstraZeneca is now the largest company listed on the London Stock Exchange.
GSK’s share price has declined by 16% over the past year, taking its market value to £60bn, partly because of concerns over appeals in US lawsuits claiming that its heartburn drug Zantac caused cancer.
Russ Mould, investment director at the stockbroker AJ Bell, said AstraZeneca’s market value was a “glowing endorsement of M Soriot’s strategy,” explaining: “The company beat estimates consistently in 2022 and raised the forecast bar for 2023 back in February so expectations are high.”
The company is expected to report revenues of $10.7bn for the January to March period on Thursday, and core earnings a share of $1.69. This is below last year’s first-quarter figures of $11.4bn in revenues and core earnings of $1.89 a share.
Revenues from its Covid-19 vaccine and antibody treatment are likely to drop sharply this year, so total 2023 revenues are expected to grow at a low-to-mid single digit percentage rate, and at a low-double-digit rate excluding Covid treatments.
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AstraZeneca is working on a new version of its Covid antibody drug to protect people with weak immune systems against all known virus variants, and hopes to make it available by the end of the year. Its original drug, Evusheld, lost its emergency authorisation in the US in January because of new dominant variants emerging.
The group intends to start 30 late-stage clinical trials this year, and expects to launch 15 new medicines by the end of the decade, including some blockbusters with more than $1bn in annual sales.
On Wednesday, GSK is forecast to post turnover of £6.5bn in the first quarter and profit before tax of £1.7bn. This compares with £9.8bn revenue a year earlier and a £2.6bn profit, figures which included Haleon.
“GSK is behind AstraZeneca in some ways when it comes to reshaping itself but it may be catching up fast after the Haleon spin-off, a welcome tidying up of its balance sheet and ongoing investment in its drug development pipeline, either via its own R&D or acquisition,” Mould said. Last week, GSK bought Canada’s Bellus Health for $2bn, maker of a chronic cough medicine.
