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Understanding the Revenue Fall in AstraZeneca’s Largest Segment in 3Q16

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Dec. 4 2020, Updated 10:52 a.m. ET

The CVMD segment

AstraZeneca’s (AZN) CVMD (Cardiovascular and Metabolic Disease) segment is the company’s largest contributor to total revenues. The CVMD segment contributed nearly 32.4% of total revenues in 3Q16, following a strong performance of Onglyza, Brilinta, Bydureon, Farxiga, Byetta, Crestor, and Seloken. These revenues were partially offset by lower sales of Alakand and other products.

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Brilinta-Brilique

Brilinta-Brilique, a growth platform product, is used to prevent unwanted blood clots in heart and blood vessels. The FDA (US Food and Drugs Administration) approved a new 60 mg dose for Brilinta in the second half of 2015.

The drug’s 3Q16 revenues reported an operational rise of 22% to $208 million, with a 22% rise in US sales at $84 million, an ~11% rise in European market sales, and a ~60% rise in sales in emerging markets at constant exchange rates.

Onglyza

Onglyza, a diabetes product that controls blood sugar level, reported a 16% fall in revenues at constant exchange rates, driven by a 17% fall in sales in US markets, a 21% fall in sales in emerging markets, and a 22% fall in European markets.

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Crestor

Crestor, which is used to reduce the cholesterol and triglycerides in the blood, contributed ~12.1% of total 3Q16 revenues for AstraZeneca. At constant exchange rates, Crestor revenues fell 44% at $688 million in 3Q16.

In US markets, Crestor’s revenues fell 82% to $124 million due to patent expiry in May 2016. European markets reported flat revenues of $219 million due to competition from generic statins, while sales in emerging markets rose 17% at constant exchange rates in 3Q16.

The competitors for Crestor include Lipitor from Pfizer (PFE), Zocor from Merck (MRK), Advicor from Abbott Laboratories (ABT), and Pravachol from Bristol-Myers Squibb (BMY)

Other CVMD products

Other products in this segment include Farxiga-Forxiga, Bydureon, Byetta, and Seloken. Farxiga-Forxiga’s 3Q16 revenues grew 64% due to higher demand in all markets including the US, Europe, and emerging markets. Bydureon revenues fell 10%, while Byetta sales fell 15% in 3Q16. The company is making constant efforts to expand its presence in diabetes products in Europe with the help of Bydureon.

To divest risk, investors can consider ETFs like the Vanguard FTSE Europe ETF (VGK), which has ~1.0% of its total assets in AstraZeneca.

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