AstraZeneca’s fourth quarter product revenue grew by 8% to $15.5bn before exchange rate moves. Sales of Oncology, the largest product line, were up 20%, followed by 10% growth in Respiratory & Immunology, which more than offset declines elsewhere.
Underlying operating profit fell by 5% to $4.1bn, reflecting one-off payments of $235mn relating to changes in royalty agreements on certain products.
Full-year free cash flow grew 18% to $11.8bn, helped by improved profitability for the year-as a whole. AstraZeneca ended 2025 with net debt of $23.4bn.
The company declared a $2.17 dividend taking the annual total to $3.20 per share, growth of 3%.
In 2026 revenue is expected to grow by mid-to-high single digits (consensus 5.5%) with underlying earnings set to grow at a low double-digit rate.
The shares were flat in early trading.
Our view
AstraZeneca’s fourth quarter results were solid, if not spectacular. Sales in the key oncology division accelerated. But elsewhere, some product lines suffered from the emergence of generic competition and state-mandated price reductions in China. However, guidance for 2026 was reassuring.
Political risk is a feature of investing in this sector. But the group’s diverse geographical and clinical footprint, as well as its focus on research-led innovation, means we think it’s relatively well placed to deal with this.
There’s been no change to the targeted $80bn annual revenue and a mid-thirties operating margin by 2030. The revenue ambition is well supported by the depth of the pipeline and the existing portfolio. But as Astra scales, it's upping underlying investments in research and sales capabilities, which we believe are the lifeblood of the business.
These investments take time to generate benefits, which could see margins come under pressure. That’s to be expected, but if new drug approvals and launches don’t pan out as hoped, then it risks becoming a long-term problem rather than a short-term timing issue.
Cancer treatments are a cornerstone of Astra's offering. The diverse late-stage pipeline means there are lots of potential shots on goal as it pioneers technologies with the potential to replace existing treatment regimes. Class leadership in multiple medicines, as well as six key regulatory approvals in the final quarter of the year, means the oncology division is set for further success in 2026.
Given the pace of research and track record of delivery, the target of marketing over 25 blockbuster drugs by 2030, from 16 today, doesn’t seem overly ambitious. Other areas of focus include autoimmune illnesses, cardiovascular conditions and rare diseases. Astra’s not currently selling any next-generation weight management (GLP1) products but it’s making strong clinical progress and is a space to watch.
Net debt sits at close to 1x forecasted cash profits which doesn't look too demanding. Astra’s generating strong cash flows from its existing portfolio of marketed medicines. This helps support a prospective dividend yield of around 1.8%. The continued research drive is keeping a lid on dividend growth but over time there could be scope for payouts to improve. However, no returns are guaranteed.
We’re optimistic about the outlook for this prolific drug developer, but the valuation now looks to have caught up with forecasts. The company’s rich pipeline has the potential to drive better than guided growth over the medium term, but clinical trials come with a significant risk of failure, meaning there’s also some downside risk.
Environmental, social and governance (ESG) risk
The pharmaceuticals sector is relatively high-risk in terms of ESG. Product governance, particularly with safety and marketing, and affordable access to treatment are the key risk drivers. Labour relations, business ethics and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, AstraZeneca's overall management of material ESG issues is strong. However, ongoing investigations into employee activities in China should be closely followed. The executive compensation plan included a target to eliminate greenhouse gas emissions by 2025, and the sustainability strategy is overseen by upper management. AstraZeneca has implemented a robust programme to monitor patient safety trends and ensure the quality and efficacy of its products.
Access to healthcare is a key strategic priority. The company has a strong human capital development programme with initiatives to recruit and retain highly specialised employees, highly pertinent following the acquisition of Alexion which adds 2,500 headcount.
AstraZeneca key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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