(Bloomberg) -- AstraZeneca Plc raised its annual forecast, driven by strong demand for its blockbuster cancer drugs, and said it plans to invest $3.5 billion in the US business by the end of 2026.
Earnings per share, excluding some items, are now expected to rise by a high-teens percentage, up from a mid-teens percentage previously forecast, the company said Tuesday. Top-selling cancer medicine Tagrisso was a big driver with sales performing better than expected, while revenue from newcomer Enhertu also beat expectations.
The British drugmaker said it will invest $3.5 billion in research and development and manufacturing in the US by the end of 2026. This includes $2 billion of new investment as Astra seeks to further bulk up its US business, which now generates twice as much revenue as Europe and is the biggest driver of sales of any region.
The investment includes Astra’s previously announced R&D facility in Cambridge, Massachusetts, as well as a biologics facility in Maryland, cell therapy manufacturing capacity on both the west and East coasts and specialty manufacturing in Texas.
Astra has been ramping up its manufacturing in a number of regions, but the US plan is larger than a $1.2 billion investment in Singapore announced earlier this year. It’s also bigger than a planned £650 million ($833 million) investment in the UK. The pharma company’s capital expenditure totaled $1.4 billion in 2023.
Astra’s shares rose as much as 3% in early London trading before paring back the gains. They had fallen 5.8% this year through Monday’s close.
While sales of Astra’s oncology drugs were up 10% more than expected in the third quarter, analysts expressed concern about development of an experimental cancer medicine called Dato-DXd. Astra and partner Daiichi Sankyo Co Ltd said Tuesday a previously submitted application to the US Food and Drug Administration had been withdrawn and another re-submitted for more targeted patient population.
The move “could drive further cuts to long-term sales estimates for this potential blockbuster drug,” said Bloomberg Intelligence’s John Murphy. The withdrawal and re-submission of the FDA application was “a setback but not entirely unanticipated,” said Jefferies Peter Welford in a note.
China Probe
The British drugmaker’s stock has been battered by news that Chinese authorities are probing alleged illegal importation of cancer drugs into China via Hong Kong. The company’s China president Leon Wang has been detained while several other current and former senior executives are under investigation.
The company is taking matters in China “very seriously,” Chief Executive Officer Pascal Soriot said in a statement, adding it will fully cooperate with officials in Beijing if requested. Astra said it has not received any notification that the company itself is under investigation.
During the third quarter, China generated about $1.7 billion of sales, up 15% on a constant exchange rate. This was the weakest growth of all its regions, with Europe sales up 22% and emerging markets, excluding China up 31%. Revenue in the US was up 23%.
The revelations on China have overshadowed results from the company’s highly anticipated obesity assets. Three new potential obesity drugs were all shown to be safe and are moving forward to mid-stage trials, Astra has said. Those drugs include an experimental obesity pill.
Astra is working to almost double sales to $80 billion and launch 20 new medicines by the end of the decade. Cancer drugs will be key to hitting this revenue target.
(Updates with context on scale of US investment. A previous version corrected a regional breakdown and company spelling.)
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