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AstraZeneca sees China Q4 sales more than halving, mid-teens growth from 2020

AstraZeneca PLC, the U.K. drugmaker with an intensifying focus on novel cancer medicines and China, forecast that growth will more than halve in its second-largest market from the fourth quarter of the year, as the impact of China's value-based procurement begins to weigh.

AstraZeneca CEO Pascal Soriot told reporters on a conference call that in the mid-term, he expects growth in China to more than halve to the mid-teens as value-based procurement — which is now "in full swing" and has been rolled out throughout the country — takes hold. He was speaking after the Cambridge, England-based pharmaceutical company raised sales guidance for the full year for the second quarter in a row after reporting forecast-busting third-quarter numbers.

Demand for novel cancer medicines including Tagrisso, Imfinzi and Lynparza in China has helped propel AstraZeneca to its fifth consecutive quarter of earnings growth, with third-quarter oncology sales in the region up by 67% at constant exchange rates.

Total oncology sales in the quarter were 48% higher at $2.33 billion, with Imfinzi sales of $1.04 billion, compared with Deutsche Bank's $384 million forecast, and Lynparza coming in at $847 million compared with Deutsche's $313 million estimate.

Cancer medicine Tagrisso, the company's best-selling drug, advanced to $2.3 billion — well above Deutsche's $825 million estimates for the quarter — boosted by inclusion on China's national reimbursement list as a second-line treatment. Head of oncology Dave Fredrickson told reporters that an important opportunity for growth lies in whether the pill can now be approved for reimbursement in front line setting. "The timing of that is likely to be sometime in the second half of next year," he said, adding that a price cut is likely in order to secure the NRDL listing.

"AstraZeneca has delivered another excellent set of results with strong growth across all core franchises, and has upgraded its revenue guidance again," said Trinity Delta analyst Mick Cooper in an email. "Tagrisso and the other newly launched oncology products still lead the way, and the growth in China continues to impress. AstraZeneca is using the strong sales performance to increase investment in its product portfolio, which bodes well for the future."

Soriot was keen to emphasize that, while oncology has made progress faster than other therapeutic areas, AstraZeneca still has three core areas, including respiratory and cardiovascular and renal medicines. The drugmaker has 14 potential blockbusters across the world, six of which are in oncology, and incremental sales of new medicines have brought in $3 billion to date. In the third quarter, respiratory medicines advanced by 18% and cardiovascular and renal medicines were 11% stronger in the quarter.

"Our commitment to doing business the right way is at the heart of everything we do," the CEO said. "The outstanding growth trajectory this year has allowed us to upgrade our guidance for product sales for the second consecutive quarter and we now expect growth in the low-to-mid teens," Soriot said.