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AstraZeneca plc’s New Drug Unlocks Billions In Potential Revenue

This weekend was one of the most important dates in AstraZeneca’s (LSE: AZN) calendar. On Sunday the results of a key study were released, which showed that the company’s Brilinta blood thinner may assist some patients with heart problems. 

The Brilinta trial, codenamed PEGASUS (Prevention of Cardiovascular Events in Patients with Prior Heart Attack Using Ticagrelor Compared to Placebo on a Background of Aspirin–Thrombolysis in Myocardial Infarction 54), saw the Brilinta blood thinner tested on 21,000 patients who had suffered a heart attack. And it was found that long-term use of the drug can lower the risk of heart attacks and strokes by 16% for patients, who have already experienced one of the two events. 

Brilinta is already on sale and generated sales of $476m for Astra within Europe during 2014. Until Sunday’s study was published, the drug’s sales had struggled to gain traction. Clopidogrel, a generic competitor to Brilinta, costs around 95% less than Astra’s treatment and had been stealing sales.

However, the long-term effects of Clopidogrel have not been researched, which now gives Astra the edge over its generic competitor. 

The PEGASUS study gives Astra the ammunition it needs to retake market share from generic competitors. Analysts believe that Brilinta can rack up annual sales for Astra of $3.5bn by 2023, although estimates vary depending on which source you read. 

Diminishing returns

Unfortunately, while the headline figures for Astra’s PEGASUS trial are impressive, the underlying numbers are more concerning. 

You see, while the study showed that a number of major cardiovascular events could be prevented by Brilinta, the blood thinner also caused a similar number major bleeds. Some medical analysts are seriously worried about these consequences, stating that Astra’s Brilinta is subject to diminishing returns. Investors should also view these results with caution.

Any medical trails that show mixed results can be a warning of future troubles at the company in question. If problems are found with Brilinta over the next few years, after the company starts to sell the drug around the world, lawsuits could follow and the damage to Astra’s reputation would be dire. 

But while this is a valid concern, Astra’s investors can be reassured by the size of the PEGASUS trial. The confirmation that the Brilinta treatment is a better alternative than its generic competitors is also a reason for investors to celebrate.  

Nonetheless, Brilinta’s success is just one part of Astra’s long-term plan to return to growth by 2017 and achieve sales of £45bn by 2023.

Although for the next 18 months, investors shouldn't expect any fireworks from the company.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.