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An Analysis of AstraZeneca’s Growth Rate

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AstraZeneca’s growth rate

AstraZeneca (AZN) achieved a 2% growth rate at constant exchange rates in 2Q15 over 2Q14. This was the sixth consecutive quarter for top-line growth. It beat analysts’ estimates for the second consecutive quarter, this time by 3.57%. The cardiovascular and metabolic diseases segment was the major contributor to 2Q15 growth.

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Revenues by segment

AstraZeneca’s business is divided into the following four segments:

  • The cardiovascular and metabolic diseases segment contributed nearly 37.5% of total revenues in 2014. This is AstraZeneca’s highest contributing segment with a contribution of ~42% of revenues at $2.45 billion in 2Q15.
  • The infection, neuroscience, and gastrointestinal segment is AstraZeneca’s second largest revenue contributor. This segment contributed nearly 31.4% in 2014. Its contribution decreased to ~24.9% of revenues at $1.45 billion in 2Q15.
  • The performance of the respiratory, inflammation, and autoimmunity segment is improving. Its contribution increased from ~19.2% in 2014 to ~21% in 2Q15. AstraZeneca’s focus on this segment is increasing with many late-stage projects.
  • Revenues for the oncology segment contributed ~11.6% in 2014 and increased to ~12.1% in 2Q15.

Growth rate

AstraZeneca’s revenues have shown positive year-over-year growth since 2013. The company reported a 1.5% increase in revenues for 2014 to $26.1 billion, compared to $25.7 billion in 2013. The company has revised its financial guidance and now expects the top line to decline by a low single digit. Further details for revenue stream are discussed in the article How Was AstraZeneca’s Financial Performance in 2014?

AstraZeneca’s performance is dependent on a few of its key drugs including Crestor, Symbicort, Pulmicort, Seroquel XR, and Nexium. What products affect the growth rate for each segment? We’ll take a look at that in the following articles.

Revenues for Merck & Co. (MRK) decreased by ~11% in 2Q15 compared to 2Q14. Pfizer’s (PFE) revenues decreased by ~7%, and Novartis AG’s (NVS) decreased by ~5% due to changes in the foreign exchange. Investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV) or the VanEck Vectors Pharmaceutical ETF (PPH) to avoid the risk.

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