AstraZeneca plc (LON:AZN) has announced its FY and Q4 2023 results.
Strong growth and pipeline momentum with three new medicines approved since the third quarter
Revenue and EPS summary
| FY 2023 | Q4 2023 | ||||||
| % Change | % Change | ||||||
| $m | Actual | CER[1] | $m | Actual | CER | ||
| – Product Sales | 43,789 | 2 | 4 | 11,323 | 5 | 5 | |
| – Alliance Revenue[2] | 1,428 | 89 | 89 | 424 | 69 | 67 | |
| – Collaboration Revenue2 | 594 | (1) | (1) | 277 | 75 | 74 | |
| Total Revenue | 45,811 | 3 | 6 | 12,024 | 7 | 8 | |
| Total Revenue ex COVID-19 | 45,488 | 13 | 15 | 12,036 | 16 | 16 | |
| Reported EPS | $3.84 | 81 | 96 | $0.62 | 7 | 5 | |
| Core[3] EPS | $7.26 | 9 | 15 | $1.45 | 5 | 7 | |
Financial performance for full year 2023 (Growth numbers at CER)
‒ Total Revenue $45,811m, up 6% despite a decline of $3,736m from COVID-19 medicines[4]
‒ Excluding COVID-19 medicines, Total Revenue increased 15% and Product Sales increased 14%
‒ Double-digit Total Revenue growth from Oncology 21%, CVRM 18%, R&I 10%, and Rare Disease 12%
‒ Core Product Sales Gross Margin[5] of 82%, up two percentage points, reflecting the decline in sales of lower margin COVID‑19 medicines
‒ Core Operating Margin of 32% increased by two percentage points including the previously announced gain from an update to the contractual relationships for Beyfortus, totalling $712m and recorded as Core Other operating income. In the quarter, higher SG&A expense drove lower operating margins, partly due to phasing of expenses and increased investment in launches for Airsupra, Wainua and Truqap
‒ The Core Tax Rate for the year was 17%. In the fourth quarter, the tax rate was negatively impacted by reviews by tax authorities, administrative appeal processes and other adjustments, offset by a routine intragroup reorganisation of IP, leading to a tax rate of 10% in the quarter
‒ Core EPS increased 15% to $7.26
‒ Second interim dividend declared of $1.97 per share, making a total dividend declared for FY 2023 of $2.90 per share
‒ Total Revenue and Core EPS in FY 2024 are each expected to increase by a low double-digit to low teens percentage at CER
Pascal Soriot, Chief Executive Officer, said:
“As AstraZeneca celebrates its 25th anniversary, we are pleased to report another year of strong financial performance and scientific progress, with double-digit earnings growth, and investment in exciting areas of science, including antibody drug conjugates and cell therapies, that lay the foundations for long-term success.
We expect another year of strong growth in 2024, driven by continued adoption of our medicines across geographies. Our differentiated and growing portfolio of approved medicines, global reach and rich R&D pipeline give us confidence that we will continue to deliver industry-leading growth.”
Key milestones achieved since the prior results announcement
‒ Three first approvals for new molecular entities: Truqap (capivasertib), Wainua (eplontersen), Voydeya (danicopan)
‒ US approvals for Truqap plus Faslodex in HR-positive, HER2-negative advanced breast cancer with biomarker alterations (CAPItello‑291), and Wainua for ATTRv-PN (NEURO-TTRansform). China approvals for Imfinzi in mBTC (TOPAZ-1) and Beyfortus for prevention of RSV in infants (MEDLEY/MELODY). First approval, in Japan, for Voydeya, as an add-on therapy to Ultomiris or Soliris for PNH with EVH (ALPHA)
‒ Enhertu granted Priority Review in the US for patients with metastatic HER2-positive solid tumours
Guidance
The Company issues its Total Revenue and Core EPS guidance for FY 2024 at CER, based on the average foreign exchange rates through 2023.
Total Revenue is expected to increase by a low double-digit to low teens percentage
Core EPS is expected to increase by a low double-digit to low teens percentage
‒ Collaboration Revenue is expected to increase substantially, driven by success-based milestones and certain anticipated transactions
‒ Other operating income is expected to decrease substantially (FY 2023 included a $241m gain on the disposal of Pulmicort Flexhaler US rights, and a $712m one-time gain relating to updates to contractual arrangements for Beyfortus)
‒ The Core Tax rate is expected to be between 18-22%
The Company is unable to provide guidance on a Reported basis because it cannot reliably forecast material elements of the Reported results, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement.
Currency impact
If foreign exchange rates for February 2024 to December 2024 were to remain at the average rates seen in January 2024, it is anticipated that both FY 2024 Total Revenue and Core EPS would incur a low single-digit adverse impact versus the performance at CER. The Company’s foreign exchange rate sensitivity analysis is provided in Table 19.
Investor Day
AstraZeneca will host an Investor Day on 21 May 2024. For more information, see www.astrazeneca.com/investor-relations.html .
Corporate and business development
In November 2023, AstraZeneca launched Evinova, with an ambition to become a leading provider of digital health solutions to better meet the needs of healthcare professionals, regulators and patients. Evinova will prioritise bringing to market established and scaled digital technology solutions already being used globally by AstraZeneca to optimise clinical trial design and delivery. Globally-leading clinical research organisations Parexel and Fortrea have entered into agreements to offer Evinova digital health solutions to their wide customer base.
In December 2023, AstraZeneca entered into a definitive agreement to acquire Icosavax, Inc (Icosavax). The acquisition strengthens AstraZeneca’s late-stage pipeline with Icosavax’s lead investigational vaccine candidate, IVX-A12, a potential first-in-class, Phase III-ready, combination VLP vaccine that targets both RSV and hMPV. RSV and hMPV are both leading causes of severe respiratory infection and hospitalisation in adults 60 years of age and older and those with chronic conditions such as cardiovascular, renal and respiratory disease. Subject to the satisfaction of the conditions in the merger agreement, the acquisition is expected to close in the first quarter of 2024.
In December 2023, AstraZeneca entered into a definitive agreement to acquire Gracell Biotechnologies Inc. (Gracell), a global clinical-stage biopharmaceutical company developing innovative cell therapies for the treatment of cancer and autoimmune diseases. The proposed acquisition will enrich AstraZeneca’s growing pipeline of cell therapies with GC012F, a novel, clinical-stage FasTCAR-enabled BCMA and CD19 dual-targeting CAR-T therapy, a potential new treatment for multiple myeloma, as well as other haematologic malignancies and autoimmune diseases including systemic lupus erythematosus. The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions, including regulatory clearances, and Gracell shareholder approval.
In February 2024, AstraZeneca announced that it is investing $300 million in a state-of-the-art facility in Rockville, Maryland to establish life-saving cell therapy platforms for critical cancer trials and future commercial supply. To align with clinical trial timelines, the site will initially focus on pivotal clinical trial manufacturing of CAR-T cell therapies to meet current clinical supply demand. More than 150 new highly skilled jobs will be created to initially focus on manufacturing T-cell therapies to enable clinical trials to be conducted around the world. Over time, the site may expand its focus to support other therapy areas.
Sustainability highlights
Through the Sustainable Markets Initiative Health Systems Task Force, AstraZeneca announced an industry-first renewable power agreement in China together with four global healthcare leaders and renewable energy company Envision Energy, resulting in potential annual emissions savings of approximately 120,000 tonnes, the equivalent of taking 25,000 cars off the road. See the Sustainability section in this document for further details.
Conference call
A conference call and webcast for investors and analysts will begin today, 8 February 2024, at 11:45 UK time. Details can be accessed via astrazeneca.com.
Reporting calendar
The Company intends to publish its Q1 2024 results on 25 April 2024.
[1] Constant exchange rates. The differences between Actual Change and CER Change are due to foreign exchange movements between periods in 2023 vs. 2022. CER financial measures are not accounted for according to generally accepted accounting principles (GAAP) because they remove the effects of currency movements from Reported results.
[2] Effective 1 January 2023, the Group has updated the presentation of Total Revenue. For further details of the presentation of Alliance Revenue and Collaboration Revenue, see the Basis of preparation and accounting policies section of the Notes to the Condensed consolidated financial statements section.
[3] Core financial measures are adjusted to exclude certain items. The differences between Reported and Core measures are primarily due to costs relating to the acquisition of Alexion, amortisation of intangibles, impairments, legal settlements and restructuring charges. A full reconciliation between Reported EPS and Core EPS is provided in Table 13 and Table 14 in the Financial performance section of this document.
[4] The COVID-19 medicines are Vaxzevria, Evusheld, and sipavibart (AZD3152) – the COVID-19 antibody currently in development.
[5] The calculation of Reported and Core Product Sales Gross Margin (formerly termed as Gross Margin) excludes the impact of Alliance Revenue and Collaboration Revenue.
