AstraZeneca Plc ended the first half with higher sales across all product groups and geographical areas as well as an increase in its operating profit margin. The sales increases were led by products for lung and ovarian cancers, as well as the asthma medicine Symbicort. Geographically, sales were higher in the emerging markets than in the US, driven by sales in China.
Briefing journalists on 30 July Pascal Soriot, the chief executive, said that China is an important research hub and manufacturing centre for the company – a feature of the overall strategy that so far has not been impacted by geo-political factors.
By far the biggest event in the first half however was AstraZeneca’s decision to collaborate with the University of Oxford to develop a Covid-19 vaccine based on a chimpanzee adenovirus vector. In July, results from a Phase 1/2 trial of the vaccine were published in The Lancet showing that it induced both T cell and neutralising antibody responses. Late-stage trials are underway in the UK, Brazil and South Africa and are due to start in the US in the third quarter.
Mr Soriot said AstraZeneca has the capacity to deliver more than two billion doses of the vaccine and will supply it globally at no profit during the pandemic. He also noted that the company has in-licensed monoclonal antibodies from Vanderbilt University in the US with a view to developing a combination antibody therapy for the prevention and treatment of Covid-19. If successful, such a therapy might be used in the care home sector.
Like other pharma companies, AstraZeneca performed better over the first half than during the second quarter owing to government-enforced lock-downs in April and May which suppressed economic activity. Nevertheless revenue grew during both periods.
Over the first six months revenue, which includes product sales and income from collaborations, was $12.6 billion, up by 12% from a year earlier. Oncology product sales were up by 28%; respiratory drug sales, up by 5% and sales of medicines for cardiovascular, renal and metabolic disorders, up by 8%. Second quarter revenue grew by 8% to $6.3 billion but was affected by a decline in sales of the asthma drug Pulmicort in China.
China has become an increasingly important market for AstraZeneca representing 21% of revenue in the first half. Altogether, emerging market countries accounted for 34% of global revenue, compared with 33% for the US and 19% for Europe.
AstraZeneca achieved an operating profit of $2.5 billion in the first six months, giving an operating margin of 19.8%, up from 14.1% a year earlier. The wider margin reflected both higher revenue and slightly lower spending on sales and administration.
The company has confirmed its expectation that revenue will increase by a high single-digit to a low double-digit percentage this year.
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