What Are the Main Factors Driving AstraZeneca’s Largest Segment?

Cardiovascular and metabolic disease segment

As discussed, the CVMD (cardiovascular and metabolic disease) segment is the largest contributor of revenues for AstraZeneca (AZN). CVMD’s contribution to total revenues increased from 37.5% in 2014 to 40.1% in 2015, following a strong performance by Onglyza, Brilinta, Bydureon, Farxiga, Byetta, and Seloken, and partially offset by lower sales of Crestor, Alakand, and other products.

What Are the Main Factors Driving AstraZeneca’s Largest Segment?

MedImmune, the global biologics R&D (research and development) arm of AstraZeneca, entered into a collaboration with the University of Michigan and Eli Lilly and Company (LLY) to identify new therapeutic targets for the treatment of patients with chronic kidney disease on February 11, 2016. AstraZeneca also acquired California-based ZS Pharma in November 2015.

Crestor

Crestor, used to reduce cholesterol and triglycerides in blood, contributed ~21% of total 2015 revenues for AstraZeneca. At constant exchange rates, Crestor revenues declined by 3% to $5.0 billion during 2015. In US markets, sales declined 3% to $2.8 billion following a lower market share and destocking. European markets reported a 9% decline in sales to $916 million due to competition from generic statins, while sales in Japan and China grew by 8% and 13%, respectively, during 2015.

This drug is expected to lose its exclusivity in May 2016 in US markets, which presently contribute to over 50% of the total sales for this drug. This is expected to have a substantial impact on the future revenues for this segment.

Crestor competes with Lipitor from Pfizer (PFE), Zocor from Merck & Co. (MRK), Advicor from Abbott (ABT), and Pravachol from Bristol-Myers Squibb (BMY).

Onglyza

Onglyza, a diabetes product for controlling blood sugar level, reported a 2% increase in revenues at constant exchange rates. The 2015 revenues were mainly driven by an 8% increase in sales in the European markets and a 41% increase in sales in the emerging markets, and substantially offset by a 13% decline in US sales due to AstraZeneca’s increased focus on promoting Farxiga in the United States.

Brilinta

Brilinta (Brilique in Europe), a growth platform product, is used to prevent unwanted blood clots in the heart and blood vessels. The FDA (Food and Drug Administration) approved a new 60-milligram dose for Brilinta in the second half of 2015. The drug’s 2015 revenues increased by 44% at constant exchange rates, with an increase of 64% in US sales to $240 million, an ~18% increase in European sales, and a ~91% increase in sales for emerging markets.

Other CVMD products

Other products in this segment include Farxiga (Forxiga in Europe), Bydureon, Byetta, and Seloken. Farxiga’s 2015 revenues grew by 137% due to higher demand in the US and European markets. The drug was introduced into Australia and other international markets in 2015. The company is making constant efforts to expand its presence in the diabetes product market in Europe with the help of its Bydureon drug. Investors could consider ETFs such as the VanEck Vectors Pharmaceutical ETF (PPH), which holds ~4.5% of its total assets in AstraZeneca.