Coronavirus expected to hit AstraZeneca results in China
AstraZeneca expects the coronavirus outbreak to hit its earnings in the first quarter of 2020.
The Cambridge-based biopharmaceutical company warned of an “unfavourable impact from China” on its profit line.
“Depending on the impact of the Covid-19 epidemic, total revenue is expected to increase by a high single-digit to a low double-digit percentage,” the company told analysts and investors.
China is the fastest-growing sales region for AstraZeneca, with the 2019 full-year results published on Friday showing growth of 35 per cent there on a constant currency basis, compared to 13 per cent for the US, two per cent in Europe and 26 per cent in Japan.
CEO Pascal Soriot told journalists there had been “limited impact” on its balance sheet so far from the coronavirus, but said: “We want to be actively conservative in our outlook.”
Speaking later to CNBC, he described the virus as a “lot more contagious” than flu, but pointed to the efforts made by the Chinese authorities as a reason for hope.
“I will not say it’s totally controlled yet, but I’m hoping that over the next few months that we will see it get under control,” he said.
As of Friday, the Covid-19 outbreak has infected more than 64,000 people and claimed 1,383 lives, all but three of them in China.
Meanwhile, 2019 was described by AstraZeneca as “a year of strong revenue growth, supported by the launch of new medicines and further good progress on its pipeline”.
Sales grew 15 per cent on a constant currency basis to $23.6billion, with new medicine sales up 62 per cent. Total revenue, including from collaborations, was £24.3bn, up 13 per cent, while core operating profit was £6.4bn, also up 13 per cent.
All its therapy areas showed progress - with oncology up 47 per cent, respiratory up 13 per cent and cardiovascular, renal and metabolism, including diabetes medicines, up 12 per cent.
Chief financial officer Marc Dunoyer said: “Performance was driven by primarily the new products. The pipeline has continued to develop and mature. We have 21 approvals in one single year, which is extraordinary.”
There was a slowdown to the growth the fourth quarter, however, with revenue up four per cent to $6.7bn, as new drug sales missed forecasts.
CEO Pascal Soriot said: “In the first full year of our return to growth, we made good progress in line with our strategy. Results from our new medicines and emerging markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia.
“Our collaborations also progressed at pace, including that with Daiichi Sankyo, while there were several regulatory approvals for new medicines in China at the end of the year, such as Lynparza in first-line ovarian cancer.
“Driven by a strong team, 2020 is anticipated to be another year of progress for AstraZeneca. We are becoming a better-balanced business, both regionally and through our medicines. This transition is a further step towards improving operating leverage and cash generation.
“As we accelerate our commitments to achieving our long-term climate-change and decarbonisation targets, we will maintain our focus on executing a strategy centred on
science and patients.”
AstraZeneca has launched a $1bn strategy to be zero carbon by 2025, and announced a reforestation plan under which 50 million trees will be planted around the world.
Earnings per share (EPS) were $3.50 for the year, although just $0.89 in the fourth quarter.
The company forecasts core EPS up by a mid- to high-teens percentage in 2020.