Astrazeneca and Glaxosmithkline (GSK), the UK’s two largest pharmaceuticals groups, offered some good news for investors yesterday with both companies posting positive first quarter results.
The pandemic has proven a boost for the pair, with Astrazeneca highlighting larger prescriptions, patients sticking more strictly to treatments and stockpiling as helping revenues to a 17% gain. Glaxosmithkline saw its revenues for the quarter grow by 10% year-on-year thanks to increased demand for pain relief to treat coronavirus symptoms plus burgeoning demand for vitamins and minerals as consumers increased purchases in the hope of improving their resistance to Covid-19.
Astrazeneca reported revenues of $6.4 billion over the first three months of the year, calculated at a constant currency rate. Product sales were, at $6.3 billion, ahead of analyst estimates for $5.9 billion. The company has now recorded seven consecutive quarters of growth. However, that is put down to a strengthened pipeline of new blockbuster drugs including cancer treatments, rather than attributable to the coronavirus pandemic.
Meanwhile, GSK’s 10% growth in revenues took its income for the three months to the end of March to £9.1 billion. Growth was relatively evenly spread across the company’s three divisions of pharmaceuticals, vaccines and consumer healthcare. Consumer sales were up 11% to £2.9 billion, vaccines by 19% to £1.8 billion and the core pharmaceuticals business registered 6% growth to £4.4 billion.
Guidance for 2020 as a full year was held at previous levels and a dividend of 19p a share announced for the quarter. However, a note of caution was sounded with the company making investors aware that the Covid-19 pandemic could also be a negative over the next quarter especially with regard to potential manufacturing disruption, supply chain risk and restrictions around clinical trials for pipeline drugs.
Astrazeneca CEO Pascal Soriot commented:
“Another quarter of strong growth across every therapy area and region. We have nine blockbusters in our portfolio now. We are not a one or two-engine plane, we are flying with many engines.”
Sales of Tagrisso, Astrazeneca’s lung cancer drug, were a major plus – up 58%, with oncology sales generally up 34% to $2.5 billion. Emerging markets were also a big winner, with sales up 82%. Respiratory and immunology revenues grew 22% to $1.6 billion.
Astrazeneca and Glaxosmithkline are working together on a collaboration with the University of Cambridge to help combat the Covid-19 pandemic. They joint initiative is targeting the delivery of 30,000 coronavirus diagnostic tests a day by early next month.
For both companies, the disruption of clinical trials is highlighted as the biggest business challenge to result from the pandemic. GSK said 87% of its clinical trials have been delayed by between 1 and 3 months with “a couple” halted indefinitely. Astrazeneca is moving, where possible, to home-based treatment and monitoring for its clinical trials and trying to move patient recruitment to less-affected regions. Recruitment will also be speeded up after lockdown restrictions are eased.