AstraZeneca PLC Primary Business Activities

AstraZeneca PLC Primary Business Activities

Historical Summary

AstraZeneca was formed in 1999 after a merger between Astra AB of Sweden and Zeneca PLC of the United Kingdom. Astra AB was in 1913 in Sweden by a corporation of more than 400 doctors and apothecaries who came together to create the company and were the initial shareholders. The company realized massive developments and by the end of the First World War, it was reporting massive profits. On the other hand, Zeneca Group PLC was formed due to the disintegration of Imperial Chemical Industries (ICI). ICI was created in 1926 and was one of the oldest and famous companies in the United Kingdom. By the end of the 1980s, the company faced the challenges of a mature chemical market, which were marked with high competition, slow growth, and overcapacity in most regions which led to the restructuring of the company. The company was divided into two groups in 1993, forming New ICI and ICI bioscience which was referred to as Zeneca. Among the two Zeneca was the largest with a specialty in pharmaceutical, agrochemical, and specialty products. Before Astra AB and Zeneca PLC companies merged, Astra AB was a market leader in the production of different pharmaceutical products and medical devices. On the other hand, Zeneca PLC was a leading bioscience company whose main focus was pharmaceuticals, agricultural and specialty chemicals, and disease-centered healthcare services.

Currently, AstraZeneca PLC is one of the world-leading pharmaceutical companies. The corporate headquarters for the company is based in London, while its research and development headquarters are located in Sodertalje in Sweden and its manufacturing facilities distributed in 19 different countries. The company controls nine research centers and development facilities and conducts sales in more than one hundred countries across the world. The company majors its pharmaceutical business in seven different medical areas which include anesthesia and control of pain, cardiovascular, central nervous system, oncology, infection, respiratory and gastrointestinal in which it is the global leader. Its main products range from Losec which is mainly marketed in the United States as Prilosec which is the top-selling prescription globally and Seloken, the top cardioselective beta-blocker in the world. One year after the two companies merged, the company sales rose to $15.8, with an operating profit of $4 billion.

Competitor Analysis

            AstraZeneca PLC was ranked first in the innovation index in 2018 topping the Pharmaceutical Innovation Index as per IDEA pharma. This was the first time the company led against its competitors like Johnson & Johnson, Pfizer, Abbot, Novartis, Bayer, Sanofi, Glaxo Smith Kline, and many more.  AstraZeneca was noticeably behind in the development of cancer immunotherapy drugs, which the market leaders such as Merck, Roche, and Bristol-Myers were also striving to develop but successful test trials carried out by AstraZeneca gave it a major advantage. The company realized this major milestone after it launched five new significant medicines in 2017 mainly in the therapy areas which could not be compared with any other company in the industry.

The pharmaceutical industry in the U.S is very competitive. In the last few years, the market has been very competitive, both in the branded and generic product divisions. The “Big Pharma” companies compete between themselves and nearly every company is active in R&D and production of drugs in areas with highest returns like treatment of infectious, psychiatric, and cardiovascular diseases. In 2019, AstraZeneca was ranked number three with a 5.95% market share. The market leader was Pfizer with 8.52%, Merck came second with 6.11%, Novartis fourth with 5.1%, and Eli Lilly came fifth with 4.65%.

AstraZeneca market share against its competitors in 2018

Competition for branded and patented products is mainly founded on product innovation and R&D. The innovation of a product is usually expensive and mostly requires taking high levels of risk and long lead times. Usually one out of 5,000 newly discovered chemicals becomes a medicine. Additionally, about three out of ten approved products recover their R&D costs, while it can cumulatively take about 10 to 15 years and more than $1 billion to develop a new product. Therefore most pharmaceutical companies channel their research and development efforts towards certain therapeutic classes and competition is usually focused on the product either a breakthrough product or a product that will offer a breakthrough product competition.

In 2019, Merck (89.4%) and AstraZeneca (89.7%) had the highest gross profit margins compared to other competitors in the industry. Based on SG&A margins, all companies posted a value close to the common average of 541.5% except Eli Lilly that had an SG&A margin of 51.7%. The EBITA margin average for the whole industry was 26.3%, thus at 36.8%, AstraZeneca posted the highest EBITA margin among its competitors. The net income margin for AstraZeneca was 20.8%. Other competitors such as Pfizer (12.2%) and Merck (1.87%) posted a low net income compared to the company average.

Comparative Profit Margins between AstraZeneca and its Main Competitors

AstraZeneca’s Position within the Pharmaceutical Industry

AstraZeneca PLC is among the leading firms in the pharmaceutical industry. Over different years, the company has set standards in the ways of conducting business in healthcare. AstraZeneca PLC is listed in the New York Stock Exchange (NYSE) and its market cap is rated at 87.39B USD. AstraZeneca suffered a great setback back in 2012 after their patents on some important pharmaceutical products expired and the exceptionality of such products was lost. This led to a decline of about 15% in revenue in 2012 and a reduction in sales to half than the previous year. The company then recovered gradually from this loss over six years. In 2018, AstraZeneca announced that they have attained growth in sales in the year 2017. This was largely fueled by the development of new cancer treatments, oncology pills, lung treatments, and a growth in sales in the emerging Chinese market which saw a 15% growth in 2017 and 33% in the fourth quarter of the financial year 2017 aided by the invention of new medicines.

The Pharmaceutical Invention Index was first released in 2019, at the Pharma Innovation Summit in Boca Raton. It focused on the new agents that are recently being developed in the most inventive Pharma pipelines. The pharmaceutical Innovation Index ranks companies based on their capability to add value to or get value from their pipeline. It offers a more developmental point of view depending on who is developing better medicines, implementing science and inventions in R&D. The pharmaceutical Invention index is based on four main determinants which include the portion of the pipeline to marketed drugs, the number of trials investigating new agents, the proportion of new regulatory designations, and an evaluation of the R&D investments for the companies. This data is applied to evaluate the company objectively and build an independent category score for every company.

AstraZeneca assumed the first position in 2018 and later dropped to position 12 on the innovation scale is 2019. However, the company regained its first position on the invention scale in 2020. In 2020, the company scored exceptionally well on all the four determinants. The company had a high pipeline proportion to marketed drugs, posed a higher number of trials examining new drugs, had a good proportion of new regulatory designations, and presented a greater R&D investment track record, together with an assurance to increased systematic advancements. AstraZeneca also achieved a top score in the areas of Environmental Reporting, Labour Practice Indicators, and Health Outcome Contribution. The company is a representation of the gold standard for corporate sustainability and has been one of the major reference points for investors.

Recent Developments within AstraZeneca

Scientists at AstraZeneca are tirelessly working to convert science fiction into science fact. The dream of the company is to develop inventive, targeted drugs for all patients that require them and to conform such treatments to patients who most likely need them. This strategy is referred to as precision medicine and it’s founded on specific features that make some patients react to treatments in a better way than others. The company has applied this knowledge in developing diagnostic tests that are used by doctors to prescribe the best treatments for every patient. Currently, this has become one of the common practices for patients suffering from cancer who are given such diagnostic tests before their treatment is reached. AstraZeneca has released 16 associate4d diagnostics in major markets, in line with four targeted AstraZeneca treatments, mostly for those suffering from the most challenging diseases of our time, such as lung and ovarian cancers. The company is currently applying the same method in their treatment against respiratory and cardiovascular diseases.

AstraZeneca is also applying the power of genomics, a study of the complete genetic blueprint for life through the AstraZeneca-MedImmune Genomics Initiative. This approach is intended to analyze about 2 million genomes by 2026. This is the first in scale and scope in the pharmaceutical industry. This approach enables the company to identify novel targets and novel biomarkers for medicines by placing genomics at the center of drug discovery and development. The company works with different and best pharmaceutical partners around the world which include a large network of diagnostic companies, academic partners, and genomics biotech to maximize the manufacture of the intended medicines and associated diagnostics. The company is at the forefront of revolutionizing patient care.

AstraZeneca has recently received a grant from the federal government of the United States, which has licensed it to develop a potential vaccine that is on trial at Oxford University. The U.S Department of Health and Human Services has committed $1.2 billion to AstraZeneca to develop a vaccine for Covid-19. AstraZeneca is collaborating with the health and human services department to make at least 300 million doses which are projected to be available by early October. AstraZeneca has reached agreements with different governments across the world and other organizations to produce about 400 million doses and had secured manufacturing capacity for one billion doses and its initial deliveries are meant to happen in September. AstraZeneca is also carrying out discussions on how it can cut deals with other organizations so that they can simultaneously produce the vaccine with other companies such as the Serum Institute of India.

The future direction of AstraZeneca

AstraZeneca intends to use its capabilities to make the most important effects in health where society requires it. The company is united by the need to continue changing the lives of many patients around the world while offering value to its workers, the community, and the environment. The company believes that there is a strong link between the health of their business, the patients, the workforce, the planet, and each of the aspects that affect each other. In AstraZeneca health is their business and the company’s contribution to society. The operations of the company are meant to promote a sustainable ecosystem for healthcare that impacts people and the planet through science-based innovation.  The sustainability program for the company is based on three important pillars that ensure health is at the center of their work. Being a global company, it seeks to extend its reach, scale, and prowess to impact real change different sustainability issues.

AstraZeneca is determined to achieve different goals by the year 2025. Among its ambitions, the company intends to work towards a future where every person can easily access viable healthcare solutions for life-changing treatment and prevention. The company aims at managing environmental effects across all its endeavors and its products through its retroactive approach. The company is also aimed at creating positive social impacts and stimulate ethical behaviors in all its markets across its value chain. AstraZeneca intends to create a lasting connection to human health by removing all barriers and enacting solutions since healthcare is important for global health. Ensuring a healthy environment allows the prevention of onset and progression of different diseases thus ensuring healthy results. The company is also aimed at promoting a culture of doing the right thing across its global operations, including its supply chain hence promoting health and wellbeing.

AstraZeneca aims that by 2025 it will double the number of medicines delivered and its revenue. The senior executive aims at flattening the organization, build innovation and put the future direction of the company in the hands of its employees. The company has more than 64,000 employees across more than 100 countries. AstraZeneca intends to take full advantage of its employees’ creativity by implementing its normal strategic process with a crowdsourcing event intend to make every opinion count. The 2025 plan, referred to as AZ2025 was launched through coordinated communication effort that involves town hall conferences, roadshows, and promotional videos from senior executives. The company also ensures that every employee was aware of this initiative and how to participate. The campaign has a strong brand identity that is supported by the tagline “Think, Transform, Together” which is important in raising awareness and creating a buzz. Leadership champions also encourage the development of discussions within different social media platforms as a way of further passing the message. The company has inspired both new starters and veterans to take part in the campaign as a way of shaping the future of the company. Management of all the ideas brought across by different factions of stakeholders is key to ensuring that no idea is missed.

AstraZeneca PLC intends to create partnerships with different pharmaceutical companies in its therapy areas. The company considers local medical situations and assumes a flexible strategy that allows it to achieve certain patient requirements in major markets. For instance, the company is examining available opportunities in china that can enhance and support the current commercial capabilities. The main intention of the company is on partnering opportunities in areas like pediatric, nebulized, gastric, pulmonary, cardiovascular, and traditional Chinese medicine. The company has interests beyond pharmaceutical products to diagnostics, devices, and digital technologies. It aims at working with several partners to establish sustainable patient solutions that will help in improving disease awareness, treatment, diagnosis, and post-treatment care. Although these partnerships are intended to accomplish the medical needs of patients around the partnering company, some results to global advantages.

Other Items of Significance to AstraZeneca

AstraZeneca uses data and technology to decrease the time required to discover and deliver new potential medicines. In the recent past, the company is using data science and Artificial Intelligence (AI) across their R&D to allow scientists to go past limits of science to manufacture life-changing medicines. Currently, the company is creating and can access more data than at any time before. The company has created more data in the last two years than in the entire history of its existence. However, the value of this data can only be established if we analyze, interpret, and apply it. Across its R&D, the company is using AI to assist it in deciphering this kind of information so that they can have a better understanding of the disease they intend to treat, establish new targets for new medicines, make and design better clinical tests, establish personalized medicine strategies, and augment their design methods of developing and making new drugs. The company uses AI in its quest to redefine medical science as they look for new and better ways of discovering, testing, and accelerating the possible medicines for the future.

AstraZeneca is determined to develop its basic understanding of diseases like cancer, heart and respiratory diseases, kidney, and metabolic diseases. Through intensive learning of the causes of the disease, the company hopes that it will find new ways of treating, preventing, and curing diseases. Using data science and AI, AstraZeneca is developing new biological insights to increase its R&D productivity. For instance, the company uses graph knowledge, which is a knowledge of contextual scientific information such as genes, proteins, compounds, and diseases and the interaction between them, to give scientists new insights and help in overcoming cognitive partiality. Data science and AI is also used in revealing the secrets of diseases found in the human genes. The company has opened a Centre for Genomics Research that is expected to carry out an analysis of more than two million genomes by 2026. Scientists in AstraZeneca are employing gene-editing software referred to as CRISPR to delete all genes in the genome to determine the role of each gene. On top of this, the company scientists are also examining the genetic compositions to help in a better understanding of diseases. Examination of a high number of genome ensures that these studies lead to a huge amount of data. Data science and AI are expansively being applied to help AstraZeneca in analyzing and interpreting data more quickly and accurately.

AstraZeneca is investing massively in the use of AI to help in the discovery of novel medicines. AI is expected to reduce the time and increase the quality of the potential drugs candidate. Discovering a new drug is currently taking many years of extensive scientific study, synthesizing and testing of millions of molecules to establish the right properties of a drug. Artificial Intelligence is expected to shorten this process by ensuring a rapid generation of new ideas for molecules, making and ranking these ideas by the use of predictions based on large sets of data.

Each week, pathologists at AstraZeneca can analyze millions of tissue samples from the research studies. They examine them for disease and for biomarkers that may show how a patient is likely going to respond to their medicines. This consumes a lot of time and that is why the company has shifted to training its pathologists about AI systems to help in accurate sample analysis. This idea of using AI was fueled by the development of self-driving cars and their ability to coordinate with the surrounding. The recent achievement of AI training is that pathologists at AstraZeneca have been able to score tumor cells and immune cells for biomarker referred to as PD-L1, which is capable of informing immunotherapy-based treatment decisions for bladder cancer.