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The tech-heavy Nasdaq Composite index recently entered correction territory. Though it was able to climb out of it, equities broadly remain down for the year. Still, some companies are performing well amid the volatility.
AstraZeneca (NASDAQ: AZN), a U.K.-based pharmaceutical giant, is one of them; its stock is up by an impressive 16% since January. This performance so far in 2025 is not a fluke. And the stock may deliver strong returns, if not in the next few weeks, but for investors willing to hold onto its shares for years.
AstraZeneca's financial results remain strong
AstraZeneca's shares fell off a cliff late last year when it announced the arrest of some of its executives in China, including Leon Wang, the drugmaker's president in the country. That's on top of an insurance fraud investigation in China it had been dealing with, and allegations that the company imported illegal pharmaceutical drugs into the country.
Though these problems are worth monitoring, AstraZeneca's financial results certainly aren't an issue. Last year, its revenue jumped by 18% year over year to $54.1 billion, an excellent performance for a pharmaceutical giant. Adjusted earnings per share were $8.21, 13% higher than the previous fiscal year. AstraZeneca operates several segments focused on various therapeutic areas, and every one except "other medicines" saw sales move in the right direction in 2024.
Even with the challenges that AstraZeneca is dealing with now, last year's decline in its share price may have been overdone, given the company's strong financial results. That's likely why the stock has performed well since December, and has kept that momentum through market volatility this year.
Short-term issues won't be a death sentence
If it's found liable for illegal drug importation in China, AstraZeneca could incur a fine. The potential fine in China could amount to 100% to 500% of the unpaid importation taxes of $0.9 million. At worst, AstraZeneca will pay $4.5 million if it's found guilty -- a drop in the bucket for a company that generates tens of billions of dollars in annual revenue.
The company will also face two patent cliffs in the U.S. this year. The first is for Soliris, a medicine for a rare blood disease called paroxysmal nocturnal hemoglobinuria. The second is for Brilinta, a treatment used to reduce the risk of heart attacks. Neither of these patent expirations should be a game changer for AstraZeneca.
Soliris' sales in 2024 totaled $2.6 billion, but declined 18% year over year due to patients switching to AstraZeneca's newer Ultomiris. Brilinta's revenue in 2024 came in at $1.3 billion, up 1% year over year -- it was already facing generic competition in other countries. Because Soliris and Brilinta contributed little (if anything at all) to the pharmaceutical giant's top-line growth last year, the loss of exclusivity for these medicines won't harm its prospects.