The surprise results could hardly come at a better time for AZ boss Pascal Soriot, under intense pressure to deliver returns for shareholders after controversially rejecting Pfizer’s recent £69.4bn takeover bid.
So where’s all the extra oomph come from? Discounting any uncharitable thoughts about its having put the best possible gloss on the numbers, sales of AZ’s newer diabetes, respiratory and cardiac drugs have been going pretty well, which will lend weight to Soriot’s contention that Astra does not need Pfizer as it has a rosy future as an independent.
It’s the second consecutive quarter of earnings growth for Astra, halting at least for the time being a long-term downward trend caused by older drugs going off patent. Announcing the results, Soriot was predictably bullish ‘The quality of the transformation we are seeing across all core areas of our business underpins our confidence in AstraZeneca’s long-term prospects’ he said.
But despite all the hoopla, the markets are yet to be convinced. Share rose barely a milligram, up 0.3% to around £43.70, before falling back again. And despite the earnings boost, profits remain flat at $866m (£513m) for the quarter.
Pfizer offered £55 a share so there’s a way to go yet, and many observers expect the US giant to have another go when the mandatory six-month cooling off period expires in November.
It could even be back sooner if AZ agrees, but barring a miraculous change of heart from Soriot that seems unlikely. It’s certainly going to take some strong medicine if he is to deliver his target of almost doubling revenues by 2023. Just keep taking the tablets…