AstraZeneca (AZN) unveiled plans to save about $1.5bn a year to invest in its drug pipeline. The announcement sparked the stock’s biggest one-day rally in a year, as chief executive Pascal Soriot moved to shift the focus back to growth after a turbulent few months.
The more bullish tone signals a revival for the UK-based drugmaker, a long-term market success story. Its shares had been weighed down earlier in the year by clinical trial setbacks and talk of a deal for smaller US rival Bristol Myers Squibb (BMY). The stock rose nearly 6 per cent, having gained as much as 7.3 per cent earlier in the session, and is on track to erase its year-to-date losses.
“With multiple potential blockbuster assets in late-stage development and transformative technologies scaling rapidly, we are on track to deliver our 2030 ambition and to sustain growth through the next decade,” Soriot said.
The company gave few details of how the savings would be achieved. Executives said some departments face cutbacks or restructuring, while others will retrain staff and hire for emerging needs. Soriot said shifting focus from patent-expiring drugs such as Farxiga and Brilinta toward oncology and rare diseases could make some research roles redundant. Executives declined to set out employment or geographic targets but said the company would see net job growth across different areas.
The three-year programme will be reinvested mainly in a pipeline of more than 180 projects, although AstraZeneca expects to incur up to $2bn in one-off restructuring charges. Soriot is seeking to convince investors that the group remains on course for its target of $80bn in annual revenue by 2030, which relies in part on more than 25 blockbuster medicines. Drugmakers face growing scrutiny over the strength of their pipelines as patents expire on established products and future growth depends increasingly on late-stage trial success. British rival GSK (GSK) is also pursuing a cost-saving programme.
Questions over AstraZeneca’s pipeline had intensified following setbacks involving camizestrant and Wainua. Investors have generally remained confident, however, that the breadth of its late-stage portfolio leaves it well placed to absorb disappointments.
Third-quarter results beat expectations. Core earnings were $2.79 per share on revenue of $16.21bn, up 7 per cent at constant exchange rates, against analyst forecasts of $2.59 and $15.94bn. Cancer and rare-disease medicines drove growth. Oncology revenue rose 17 per cent to $7.77bn, helped by a 35 per cent jump in Enhertu sales to $969mn and a 26 per cent rise in Imfinzi sales to about $2bn. Those gains offset pressure on older products facing generic competition, with sales of diabetes drug Farxiga falling 25 per cent to $1.61bn.
Operating expenses totaled $27.56bn in the first nine months of the year, up 7 per cent from a year earlier, and the company said costs would rise again in the fourth quarter in line with seasonal trends.
“These results should reassure investors after a turbulent period for what historically has been a really strong business,” said Sheena Berry, an analyst at Quilter Cheviot.
With 2026 guidance unchanged, analysts said investor attention is turning to 2027, when AstraZeneca expects a series of late-stage trial results that it says could generate more than $20bn in peak annual sales.