AZ shares slide after warning over coronavirus impact
Shares in AstraZeneca were sharply down this morning after it warned that the hit from the COVID-19 coronavirus could have an impact lasting a few months.
China is an important market for AZ, and sales in the country grew 28% in Q4 compared with the same period last year, to $1.19.
Overall China accounts for 19% of the company’s sales, and the news that this important market could be hit spooked investors, sending shares down 5%.
China is also an important market for top-selling cancer drug Tagrisso, which has just been added to the country’s list of reimbursed drugs.
COVID-19 will add to other headwinds in the country, where AZ warned sales growth could slow due to changes in government policy and growing competition.
While the news about the coronavirus was a disappointment to the city, analysts from Shore Capital told Reuters that other large pharma companies such as GlaxoSmithKline have not factored in the impact of the epidemic into their results.
AZ said it expects total revenue to grow by a high single-digit to a low double percentage in the year, depending on the impact of COVID-19.
There were also some issues with Tagrisso outside of China. Until Q4 Tagrisso had been storming ahead after becoming established as standard of care in certain lung cancer patients.
But sales grew by only 2% in Q4 as a result of inventory movements in the US, although the company said that demand has continued.
However the fundamentals of the business look solid, as its new generation of drugs continue to drive growth.
Sales were up a reported 12% for the full year to nearly $23.6 billion, and CEO Pascal Soriot noted that several new drugs are likely to drive growth in the coming year.
AZ’s big gamble of 2019 was a multi-billion pound collaboration with Daiichi Sankyo over the breast cancer drug Enhertu.
This has just been approved in the US with other markets expected to follow suit, and further growth is expected from Calquence in leukaemia.