AstraZeneca(AZN) - 2023 Q3 - Quarterly Report

Financial Performance - Total Revenue for Q3 2023 reached $11,492 million, a 5% increase year-over-year, with a 12% increase excluding COVID-19 medicines[5] - Core EPS for Q3 2023 was $1.73, reflecting a 4% increase compared to the previous year[5] - Total Revenue for the first nine months of 2023 was $33,787 million, up 2%, with a 12% increase excluding COVID-19 medicines[5] - Total revenue and product sales performance details are available in the financial performance section[47] - Total revenue for the company reached $33,787 million, reflecting a 2% increase compared to the previous year[49] - Total revenue for 9M 2023 reached $33,787 million, a 2% increase compared to the previous year, with a 5% increase at constant exchange rates (CER) [53] - Total revenue for the nine months ended September 30, 2023, was $33,787 million, a 1.9% increase from $33,144 million in 2022[155] - Total product sales reached $32,466 million, up from $32,200 million, while alliance revenue increased significantly to $1,004 million from $504 million[155] - Total product sales amounted to $11,018 million, representing a 4% increase overall[192] Revenue Growth by Segment - Oncology medicines saw a 20% increase in revenue, while Cardiovascular, Renal & Metabolism (CVRM) and Rare Disease segments grew by 19% and 12%, respectively[5] - Oncology product sales amounted to $12,692 million, representing 38% of total sales with a 17% year-over-year growth[48] - The sales of Farxiga in the CVRM segment increased by 36% to $4,358 million, contributing 13% to total sales[48] - Rare Disease segment generated $5,793 million in sales, showing an 11% increase year-over-year[48] - Alliance revenue surged by 99% to $1,004 million, with significant contributions from Enhertu and Tezspire[50] - The company anticipates continued growth in oncology and rare disease markets, driven by new product launches and market expansion strategies[48] - Oncology revenue totaled $13,458 million in 9M 2023, a 17% increase (20% at CER), contributing 40% to overall revenue [56] - Tagrisso revenue was $4,380 million in 9M 2023, a 7% increase, with a 10% increase at CER, driven by demand in adjuvant and first-line settings [57] - Imfinzi and Imjudo generated $3,102 million in 9M 2023, a 53% increase, with a 56% increase at CER, supported by growth in established indications [58] - Enhertu sales reached $1,844 million in 9M 2023, significantly up from $750 million in the previous year, with AstraZeneca's share being $919 million [62] - Calquence revenue was $1,839 million, a 25% increase, with a 26% increase at CER, reflecting increased global penetration [65] - Farxiga revenue reached $919 million, more than doubling, driven by heart failure and chronic kidney disease markets [64] Expenses and Profitability - Reported SG&A expenses increased by 12% to $4,800 million, impacted by legal provisions including a $425 million charge related to a legal settlement[27] - Operating margin increased to 17%, up 6 percentage points (pp) year-over-year, with a 31% actual margin for the previous period[30] - Net finance expense decreased by 9% to $291 million, with a 12% reduction in the previous period[32] - Earnings per share (EPS) reported at $0.89, a decline of 16% year-over-year, while the previous period's EPS was $1.73, reflecting a 4% increase[33] - Gross profit for 9M 2023 was $27,827 million, an 18% increase compared to $23,653 million in 9M 2022[100] - Operating profit for 9M 2023 was $6,959 million, more than double the $2,663 million reported in 9M 2022[100] - Earnings per share (EPS) increased to $3.22 in 9M 2023, compared to $1.54 in 9M 2022[100] - Product Sales Gross Margin improved to 81.6% in 9M 2023, up from 70.5% in 9M 2022[100] Research and Development - The company initiated several Phase III trials for new high-potential molecules, including a bispecific antibody for cancer treatment[6] - Research and development (R&D) expenses were $7,862 million, representing 23.3% of total revenue[100] - R&D expenses totaled $2,584 million, with a core R&D expense of $2,485 million, indicating a 5% increase year-over-year[103] Collaborations and Acquisitions - AstraZeneca announced a multi-target collaboration with Verge Genomics, with a total consideration of up to $42 million for drug target identification[38] - The company completed a purchase agreement for preclinical rare disease gene therapy programs from Pfizer, totaling up to $1 billion[38] - AstraZeneca's collaboration with Cellectis includes an initial payment of $105 million and potential milestone payments ranging from $70 million to $220 million per candidate product[40] - An exclusive license agreement with Eccogene for ECC5004 includes an upfront payment of $185 million and up to $1.825 billion in future milestones[41] - The company expects to invest $105 million in Cellectis, including an $80 million equity investment[187] - AstraZeneca completed the acquisition of Neogene Therapeutics for a total consideration of $267 million, recognizing $100 million in intangible assets and $158 million in goodwill[168] - The acquisition of CinCor was completed for $1,268 million, including $780 million in intangible assets and contingent consideration of up to $496 million based on regulatory milestones[168] Legal and Regulatory Matters - The company is involved in ongoing litigation regarding the Inflation Reduction Act, filed in August 2023[186] - AstraZeneca resolved all pending claims in the multidistrict litigation for $425 million in October 2023[183] - The company is facing various lawsuits related to its products, including claims of physical injuries from Farxiga and Xigduo XR[184] Sustainability and Corporate Responsibility - The company entered long-term renewable energy partnerships in the UK and Sweden to support sustainability efforts[42] - AstraZeneca has committed to purchasing 200 gigawatt-hours of renewable electricity per year for 10 years in Sweden, covering approximately 80% of total electricity needs at its Gothenburg and Södertälje sites[122] - The Company was ranked first for climate action in a STAT Report, highlighting its leadership in measuring and reporting climate impacts[122] - AstraZeneca received the EcoVadis Gold Medal for 2023, improving from a Silver rating in 2022, with advanced ratings in Environment and Human Rights categories[122] Future Outlook - The company expects FY 2023 Total Revenue excluding COVID-19 medicines to increase by a low-teens percentage at constant exchange rates (CER)[5] - Core EPS guidance for FY 2023 has been raised to a low double-digit to low-teens percentage increase at CER[8] - The company anticipates announcing full year and fourth quarter 2023 results on February 8, 2024[195] - The Group anticipates new revenue streams from recently launched medicines and those in development, despite potential government price interventions affecting revenues[165] - Overall, the company provided a positive outlook for future growth, emphasizing ongoing investments in new product development and market expansion strategies[191]