AstraZeneca Reports Q3 Net Loss of $1.65 Billion Amid Tagrisso Price Cuts in China

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Recently, AstraZeneca released its Q3 2021 financial report. The report shows that AstraZeneca's revenue in Q3 was $9.866 billion, a year-on-year increase of 50%; the net profit was -$1.652 billion, compared to a profit of $651 million in the same period last year; Q3 performance fell short of expectations.

In China, due to the price reduction of AstraZeneca's best-selling drugs, the Chinese market has become the main factor dragging down AstraZeneca's performance. In the third quarter, AstraZeneca's sales in China grew by only 2% at constant exchange rates, a sharp contrast to the double-digit growth seen in recent years.

Sales of the third-generation EGFR-TKI Tagrisso (Tyrshar, Osimertinib) for targeted lung cancer treatment in the Chinese market dropped by 10% in the first three quarters of this year, causing the drug's global sales growth rate to decline by 13%, reaching $3.7 billion. In the third quarter, due to the impact of the Chinese market, Tagrisso's sales even fell consecutively by 4%.

However, AstraZeneca CEO Pascal Soriot said the company still believes its China business could maintain high single-digit growth over the next four to five years. "Clearly, the performance in the Chinese market is slowing down, but for us, it remains a very important market," Pascal Soriot said during a conference call on Friday.

According to Pascal Soriot, the sales volume of the company's key drugs in China is expanding, but at least for now, it cannot fully offset the impact of price reductions. Particularly for Tagrisso, the drug's indication for treating newly diagnosed lung cancer was included in China’s medical insurance reimbursement scope in March. Following that, the sales volume of Tagrisso increased, thanks to patients switching from first- and second-generation EGFR-TKIs to Tagrisso for first-line treatment. These factors played a role in the second quarter but did not have the same effect in the third quarter.

However, AstraZeneca believes that the growing sales of Tagrisso in the Chinese market will eventually compensate for the price reduction measures taken by the company to gain coverage under China's medical insurance.

As AstraZeneca has been quicker than its peers in introducing new drugs to China, the company is now looking for new products to advance in the Chinese market. These products may come from Alexion, a company recently acquired by AstraZeneca.

Currently, Alexion has become AstraZeneca's rare disease business unit and has established a dedicated team in China. This team is negotiating with local pharmaceutical regulatory authorities to gain market access. Alexion hopes to obtain its first market access approval in 2022 and launch its rare disease portfolio in the Chinese market in 2023.

In mid-July this year, AstraZeneca completed the acquisition of Alexion. The sales of the latter's two rare blood disease products, Soliris and Ultomiris, reached $1.1 billion in the remaining time of the third quarter. Alexion has transitioned more than 70% of patients with paroxysmal nocturnal hemoglobinuria (PNH) from Soliris to the long-acting product Ultomiris. During this period, the sales of Ultomiris were $297 million, a year-on-year increase of 31%.

But as Wolfe Research analyst Tim Anderson pointed out on the call, competition is coming. Most notably, Novartis' oral iptacopan, which is being developed for the treatment of PNH as well as other indications already approved for Soliris, with the first FDA filing expected in 2023.

In addition to its existing oncology, biopharmaceuticals, and rare disease business units, AstraZeneca is creating a new division to manage COVID-19 related products, including the COVID-19 vaccine Vaxzevria and the antibody product AZD7442. Vaxzevria generated $1.05 billion in revenue in the third quarter, with a total of $2.22 billion over the first nine months of this year. As for AZD7442, the company expects the FDA to make an Emergency Use Authorization (EUA) decision this year, which would mark the first long-acting antibody preventive therapy for COVID-19.

Reference Source: AstraZeneca’s Star China Business Slows on Tagrisso Price Cut, but Alexion May Come to the Rescue