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Fundamental View
AS OF 26 Aug 2025AZN enjoys one of the strongest growth profiles in our coverage, reflecting a portfolio of innovative medicines, particularly in Oncology. The addition of Alexion supports AZN’s growth prospects, bringing strong assets in immune-mediated rare diseases.
AZN also enjoys relatively strong diversification, with core sales coming from multiple therapeutic areas and with depth across its Oncology and Biopharma platforms.
AZN’s capital allocation priorities include investment in the business, the pursuit of value-enhancing M&A, and support for the dividend.
Business Description
AS OF 26 Aug 2025- AstraZeneca is a UK-based pharmaceutical company that researches, develops, and manufactures drugs with a focus in (i) Oncology, (ii) Cardiovascular, Renal and Metabolism (CVRM), (iii) Respiratory and Immunology, (iv) Rare Disease, and (v) Vaccines and Immune.
- AstraZeneca operates in five primary segments: Oncology, CVRM (cardiovascular, renal, and metabolism), Respiratory and Immunology, Rare Diseases, and V&I (Vaccines and Immune). AstraZeneca reported FY24 revenues of $54.1 bn, with ~41% from Oncology, ~23% from CVRM, ~15% from Respiratory and Immunology, and ~16% from Rare Diseases.
- In recent years, AstraZeneca has acquired Alexion for ~$39 bn, CinCor for ~$1.8 bn, Fusion for ~$2 bn, Neogene for $320 mn, TeneoTwo for ~$100 mn with future contingent milestone payments of up to $1.1 bn, Gracell for ~$1 bn, Icosavax for ~$800 mn and Amolyt for $800 mn.
Risk & Catalysts
AS OF 26 Aug 2025Given that AZN’s leverage has been largely restored to pre-Alexion levels, we expect limited deliberate improvement from here. However, we expect future shareholder rewards and business development to be managed somewhat conservatively.
AstraZeneca has shown discipline with respect to leverage and capital allocation in recent years. While AstraZeneca pays a relatively aggressive dividend (~32% of LTM FCF), the company has historically been very conservative with share repurchases and has even used share issuance to fund certain acquisitions.
AZN recently lost a patent-infringement lawsuit against Samsung Biologics regarding a biosimilar version of Soliris.
Key Metric
AS OF 26 Aug 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|---|---|
| Revenue | 26,617 | 37,417 | 44,351 | 45,811 | 54,073 | 56,501 |
| Gross Profit | 21,318 | 24,980 | 31,960 | 37,543 | 43,866 | 45,981 |
| R&D | (5,991) | (9,736) | (9,762) | (10,935) | (13,583) | (14,499) |
| SG&A | (11,294) | (15,234) | (18,419) | (19,216) | (19,977) | (19,909) |
| Adj. EBITDA | 8,680 | 11,506 | 14,507 | 15,641 | 18,208 | 19,236 |
| Total Debt | 19,699 | 29,794 | 28,279 | 27,494 | 28,843 | 31,206 |
| Gross Leverage | 2.3x | 2.6x | 1.9x | 1.8x | 1.6x | 1.6x |
| Interest Coverage | 11.8x | 16.0x | 17.1x | 14.5x | 13.9x | 14.2x |
CreditSight View Comment
AS OF 17 Sep 2025We reiterate our Outperform recommendation on AstraZeneca. We would take the spread pickup (~15 bp) offered versus MRK at the belly of the curve. While we acknowledge MRK carries lower net leverage, the company also has a weaker operating story and faces significantly higher product concentration risks.
Recommendation Reviewed: September 17, 2025
Recommendation Changed: April 01, 2021
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