Silke Mayr AstraZeneca has increased its fiscal 2024 outlook for the second consecutive quarter, following a strong performance in the third quarter, driven by robust demand for its cancer therapies. However, the company is facing ongoing legal challenges in China, which have raised concerns about the impact on its business in the region.
Third-Quarter Earnings Exceed Expectations
AstraZeneca reported strong third-quarter earnings, surpassing market expectations. The company posted core earnings per share (EPS) of $2.08 (€1.96) and total revenue of $13.57 billion (€12.77 billion), reflecting year-on-year growth of 20% and 18%, respectively, at constant exchange rates (CER). Sales from its oncology division were the biggest contributor to the growth, with revenue increasing by 22% year-over-year.
AstraZeneca CEO Pascal Soriot expressed confidence in the company’s growth, stating: “We are encouraged by the broad-based momentum we are seeing across our company in 2024, with growth expected to continue through 2025, providing a strong foundation for our long-term ambitions through 2030.”
Despite ongoing challenges in China, Soriot reiterated AstraZeneca’s commitment to the region: “We take the matters in China very seriously and, if requested, will fully cooperate with the authorities. We remain dedicated to delivering life-changing medicines to patients in China.”
Earlier this year, AstraZeneca set an ambitious target of $80 billion (€73.8 billion) in revenue by 2030, driven by both its existing portfolio and promising late-stage treatments.
Upgraded 2024 Forecast
In light of the strong results, AstraZeneca raised its 2024 forecast, revising its revenue and core EPS growth expectations to the high-teens percentage range, up from the mid-teens growth forecast provided in the previous quarter. Initially, the company had projected low double-digit growth.
Legal Issues in China
Despite positive financial performance, AstraZeneca is dealing with legal challenges in China that have sparked investor concern. On November 5, the company’s shares experienced their largest single-day drop since 2020 after reports emerged that Leon Wang, AstraZeneca’s China President, was under investigation by Chinese authorities. This news raised fears about potential consequences for the company’s operations in the region and contributed to a 25% decline in AstraZeneca’s stock price from its peak in early September.
The investigation is reportedly focused on allegations of misconduct, including improper sales practices, smuggling of immunotherapy drugs, and insurance fraud. These issues have put pressure on AstraZeneca’s business in China, a key market for the company.
In the third quarter, AstraZeneca’s sales in China grew by 15% to $1.67 billion (€1.57 billion), accounting for 12% of its total revenue. While this growth was positive, it lagged behind other regions, such as the U.S., which saw a 23% increase in sales, and the EU, which reported a 22% increase.
AstraZeneca has stated that, to its knowledge, it itself is not under investigation. “As previously disclosed, the company is aware of individual investigations into current and former AstraZeneca employees by Chinese authorities,” the company said in a statement. “These investigations reportedly concern 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 the ongoing legal challenges, AstraZeneca remains focused on its long-term growth strategy, particularly in oncology, where it sees substantial opportunities for expansion in the years ahead.