Investment Focus: AstraZeneca

Although AstraZeneca's pipeline ranks toward the bottom of its peer group, we think the company is developing several key products that hold blockbuster potential

Damien Conover, CFA 12 May, 2015 | 10:13AM
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AstraZeneca (AZN) has built its leading presence in the pharma and biotech industry on patent-protected drugs and a developing pipeline that add up to a wide moat. However, the massive patent losses on gastrointestinal drug Nexium and cholesterol reducer Crestor in 2015 and 2016, respectively, will weigh on the company's growth prospects.

Although AstraZeneca's pipeline ranks toward the bottom of its peer group, we think the company is developing several key products that hold blockbuster potential. In particular, Forxiga holds a first-mover advantage as a new type of diabetes therapy in Europe. Also, the company's recently launched cardiovascular drug, Brilinta, could develop into a multibillion-dollar product if doctors get comfortable using the drug with low-dose aspirin.

Further, the company is developing several late-stage cancer compounds where approval requirements tend to be lower and pricing power remains strong. Within the cancer pipeline, we believe Astra's PD-L1 drug for lung cancer will be a major blockbuster.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC8,994.00 GBX-0.10Rating

About Author

Damien Conover, CFA  is an equity analyst and associate director at Morningstar.