AstraZeneca (LSE:AZN) shares have been on my radar for some time. The stock is arguably the crown jewel of the FTSE 100 as the leading British biotech/pharma firm. And its share price growth will please investors — few companies have shown such consistent growth over the past 10 years.
Two-year growth
In 2020, AstraZeneca was a permanent news feature as various organisations raced to produce the first Covid-19 vaccine. Over the following year, the company was touted as a national saviour in the UK while European leaders wildly criticised the Astra vaccine — as a journalist at the time, I was writing about the company and its spats daily.
Over the past two years, the AstraZeneca share price has grown 35%. As such, if had bought £500 of AstraZeneca shares two years ago, today I’d have £675. That’s certainly a decent return, averaging 17.5% per annum.
In fact, the AstraZeneca growth story is impressive, regardless of the benchmark. Over three years, it’s up 40%, over five years it’s up 104%, and over 10 years, it’s closer to 300%.
What’s next for AstraZeneca?
In 2021, AstraZeneca had 12 drugs with revenues ranging between $1bn and $5bn annually. As an investor, this give us a sense of where each drug is in its product cycle. But it’s worth noting that the Vaxzevria Covid-19 vaccine was the company’s second largest revenue generator, at $3.9 billion.
The sales of the Covid-19 vaccine have really helped push revenue upwards. From the trailing 12 months, revenue is $44bn, up from $37bn in 2021, $26bn in 2020, and $24bn in 2019. City analysts are expecting a near-200% increase in earnings this year, with a further 13% in 2023.
However, this doesn’t give us too much visibility on the medium-to-long term. AstraZeneca has a mammoth pipeline with 184 projects in development right now. By comparison, Pfizer only has 104. It’s worth noting that many of these pipeline projects are label extensions rather than entirely new products. Regardless, it’s still impressive.
Equally impressive is the company’s commitment to expansion through acquisition. The Alexion Pharmaceuticals buy, for a whopping $38bn, gives AstraZeneca a commanding position in immunology medicine and rare diseases.
There’s also the recent deal for LogicBio Therapeutics, which is a pioneering genomic medicines company that focuses on genome editing and gene delivery for rare diseases.
Should I buy the stock?
Amid global economic challenges, pharma has some defensive qualities that interest me. AstraZeneca will continue to sell its drugs around the world, regardless of whether economies go into recession.
The company is also likely to benefit from the weakness of the pound. Revenue in H1 was geographically varied. Around 38% came from the US, 28% from emerging markets, 20% from Europe, and 14% from the rest of the world. Foreign revenues will be inflated when converted back into GBP.
But more broadly, while there is always risk associated with biotechs and drug development, AstraZeneca’s expanding portfolio and increasing revenues puts in it a strong position. Because of the reasons noted, I’m looking to add the crown jewel of the FTSE 100 to my portfolio.
