(Nov 12): AstraZeneca plc raised its annual forecast, driven by strong demand for its blockbuster cancer drugs, and revealed a plan to invest US$3.5 billion (RM15.5 billion) in the US business by the end of 2026. 

Earnings per share, excluding some items, are now expected to rise by a high-teens percentage, up from a mid-teens percentage previously forecast, the company said on Tuesday. Top-selling cancer medicine Tagrisso was a big driver, with sales up 3.5% higher than expected, while revenue from newcomer Enhertu also beat expectations. 

The British drugmaker said it will invest US$3.5 billion in research and development (R&D) and manufacturing in the US by the end of 2026. This includes US$2 billion of new investment as Astra seeks to further bulk up its US business, which now generates twice as much revenue as Europe, and is the biggest driver of sales of any region.

The investment includes Astra’s previously announced R&D facility in Cambridge, Massachusetts, as well as a biologics facility in Maryland, cell therapy manufacturing capacity on both the west and East coasts and specialty manufacturing in Texas. 

Astra’s shares rose as much as 3% in early London trading on Tuesday. They have fallen 5.8% this year through Monday’s close. 

While sales of Astra’s oncology drugs were up 10% more than expected in the third quarter, analysts expressed concern about development of an experimental cancer medicine called Dato-DXd. Astra and partner Daiichi Sankyo Co Ltd said on Tuesday a previously submitted application to the US Food and Drug Administration (FDA) had been withdrawn and another resubmitted for more targeted patient population. 

The move “could drive further cuts in long-term sales estimates for this potential blockbuster drug”, said Bloomberg Intelligence’s John Murphy. The withdrawal and resubmission of the FDA application was “a setback but not entirely unanticipated”, said Jefferies Peter Welford in a note.

Astra’s upbeat results come after a period where the British drugmaker’s stock has been battered by news that Chinese authorities are probing alleged illegal importation of cancer drugs into China via Hong Kong. The company’s China president Leon Wang has been detained while several other current and former senior executives are under investigation.

The company is taking matters in China “very seriously”, chief executive officer Pascal Soriot said in a statement, adding it will fully cooperate with officials in Beijing if requested. Astra said it has not received any notification that the company itself is under investigation. 

During the third quarter, China generated about US$1.7 billion of sales, up 15% on a constant exchange rate. This was the weakest growth of all its regions, with Europe sales up 22% and emerging markets, excluding China up 31%. Revenue in the US was up 23%.

The revelations on China have overshadowed results from the company’s highly anticipated obesity assets. Three new potential obesity drugs were all shown to be safe and are moving forward to mid-stage trials, Astra has said. Those drugs include an experimental obesity pill.

Astra is working to almost double sales to US$80 billion and launch 20 new medicines by the end of the decade. Cancer drugs will be key to hitting this revenue target.

Uploaded by Tham Yek Lee