What Does AstraZeneca’s Growth Platform Offer?

Respiratory, inflammation and autoimmunity segment

The RI&A (respiratory, inflammation and autoimmunity) segment, one of the company’s growth platforms, is a key area of development for AstraZeneca (AZN). The segment’s contribution increased from 19.2% in 2014 to 21.0% in 2015. The key products for the RI&A segment are Symbicort and Pulmicort. Newly added products include Tudorza, Eklira, and Duaklir.

What Does AstraZeneca’s Growth Platform Offer?

To strengthen the portfolio, AstraZeneca acquired Almirall’s respiratory business and inhalation device subsidiary in November 2014 and Actavis’s (ACT) branded respiratory portfolio for the United States and Canada in 2015.

Symbicort

Symbicort, another blockbuster from AstraZeneca, is a respiratory drug used to prevent bronchospasm in patients suffering from severe asthma or chronic obstructive pulmonary disease. Symbicort’s revenues declined by 3% to $3.4 billion in 2015, following lower demand due to increased competition from recently launched analog medicines in the European markets, which was partially offset by strong volume growth in the US markets.

Symbicort competes with Advair from GlaxoSmithKline (GSK), Spiriva by Boehringer Ingelheim, Foradil from Merck & Co. (MRK), and Brovana from Sunovion Pharmaceuticals.

Pulmicort

Pulmicort is a respiratory drug used to prevent asthma attacks. Pulmicort’s revenues increased by 15% at constant exchange rates to $1.0 billion in 2015, with growth in emerging markets and China. Both Symbicort and Pulmicort have a growing demand across emerging markets including China.

Eklira and Duaklir were added to AstraZeneca’s portfolio as a result of the AstraZeneca-Almirall deal, while Tudorza and Daliresp were acquired from Actavis (ACT), now Allergan (AGN). The performance of these drugs is in line with the expectations of the company.

To divest any risk, investors could consider ETFs such as the VanEck Vectors Pharmaceutical ETF (PPH), which holds ~4.5% of its total assets in AstraZeneca, or the First Trust Value Line Dividend ETF (FVD), which holds ~0.5% of its total assets in AstraZeneca.