A top FTSE 100 share I like is the biopharmaceutical giant, AstraZeneca (LSE:AZN). Its share price value has dropped over 10% in the market crash, and I believe this is a prime opportunity to pick up shares.
AstraZeneca employs more than 60,000 people in over 100 countries. In the UK alone it directly employs over 5,000 people at five locations, including its headquarters in Cambridge.
It has a portfolio of products for major disease areas including cancer, cardiovascular, gastrointestinal, infection, neuroscience, respiratory, and inflammation.
Covid-19
Pharma companies can experience a knock on benefit from economic uncertainty. When this uncertainty is due to a health issue or pandemic, they may profit as demand for pharmaceutical goods and services usually increases.
AstraZeneca has positioned itself to help with a potential treatment for Covid-19. It has launched its fastest ever clinical drugs trial to see whether its oncology drug Calquence could reduce the need for ventilators and the number of deaths.
CEO Pascal Soriot confirmed the Covid-19 impact on business has been limited. This is despite fears that its fastest growing region, China, would suffer long-term effects. China seems to have curbed the virus and has even reopened Wuhan, the epicentre of the outbreak.
Performance & the numbers
In March, AstraZeneca released its full-year results to 31 December 2019. The key highlights for me were that total revenue was up by 13%, including a 15% increase in product sales.
Operating profit did see a 16% decrease compared the previous year but this does not concern me. The decrease was caused by higher expenses related to new drugs launches coupled with aggressive expansion into China.
Expansion into China helped sales in the region jump by 35% in 2019 alone. ‘New medicines’ made up 42% of total sales in 2019, which equates to $3.8bn. Considering these are newer drugs on the market, I think their demand and sales numbers will only continue to increase.
Covid-19 makes it difficult for the company to provide guidance for 2020. This wasn’t a surprise to me as the extent of the pandemic is unknown. The majority of companies are taking the same stance during this turbulent time.
AstraZeneca’s share price was close to 7,840p per share in the middle of January. The market crash saw it drop to about 6,220p per share in the middle of March. At the time of writing, the share price has climbed over the 7,000p per share price mark. This shows the stalwart is mounting a recovery in a bear market. AZN also has a dividend yield of near 3%, which is an enticing factor for me.
With over $6bn spent in 2019 on R&D and a project pipeline of over 160 drugs, the company is well-positioned for continued success, I believe.
In my opinion, as well as many others, AstraZeneca is one of only a few names in the FTSE 100 to have a moat. I see nothing but an increasing share price and success longer term for the company.
