AZ seeking $1.5bn in annual savings by end-2029
While praising the breadth of its pipeline, AstraZeneca has launched a three-year cost-cutting programme that will aim to slice $1.5 billion a year off its costs, with the savings reinvested in R&D.
There's no word yet on the job implications from the initiative, which AZ estimates will carry a one-time charge of around $2 billion and is expected to be completed by the end of 2029. The company's share price was trading up around 3% at the time of writing.
The UK-headquartered company is already facing headwinds from the loss of patent protection for some products, including diabetes blockbuster Farxiga (dapagliflozin), with a string of other big brands due to lose exclusivity between now and the mid-2030s, including cancer drugs Lynparza (olaparib), Imfinzi (durvalumab), and Tagrisso (osimertinib).
The gradual loss of protection insulates AZ from an abrupt patent cliff, unlike some pharma peers. Still, chief executive Pascal Soriot is clearly planning ahead to offset the impact and keep the group on course to hit ambitious financial targets in 2030, including a revenue target of $80 billion. The move follows news of job cuts at fellow UK drugmaker GSK earlier this month.
In prepared remarks accompanying the third-quarter results statement issued this morning, Soriot also pointed to a "rich series of upcoming readouts in 2027 [with] potential of more than twenty billion dollars."
He added: "With multiple potential blockbuster assets in late-stage development and transformative technologies scaling rapidly, we are on track to deliver our 2030 ambition and to sustain growth through the next decade."
AZ currently has more than 180 projects in its pipeline, and recently reported encouraging phase 3 results for IL-33-targeting antibody tozorakimab in chronic obstructive pulmonary disease (COPD), hypophosphatasia therapy efzimfotase alfa, and cancer antibody-drug conjugate (ADC) sonesitatug vedotin.
It has had R&D setbacks as well, notably failed trials for Etcamah (camizestrant) in breast cancer and Ionis-partnered Wainua (eplontersen) in cardiomyopathy.
Sales top expectations
The cost-reduction plan emerged as AZ recorded a 7% increase in third-quarter revenues to $15.19 billion, ahead of analyst expectations and once again driven by its cancer portfolio, including Imfinzi, which rose 26% to just under $2 billion on the back of new indications like bladder cancer.
Meanwhile, direct sales and alliance revenues from two Daiichi Sankyo-partnered ADCs – Enhertu (trastuzumab deruxtecan) and Datroway (datopotamab deruxtecan) – saw growth of 35% to $969 million and a threefold rise to $78 million, respectively.
On the downside, chronic kidney disease, heart failure, and type 2 diabetes treatment Farxiga fell 25% in the quarter to $1.65 billion, while antiplatelet drug Brilinta (ticagrelor) plummeted 50% to $75 million on generic erosion.
