WEBVTT - Astrazeneca CFO Talks Growth

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Probably one of the most interesting stories is what is

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<v Speaker 2>happening with AstraZeneca, this huge UK healthcare company, holding its

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<v Speaker 2>first capital markets day in ten years. This is the

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<v Speaker 2>UK's most valuable company. It's on the foot See one hundred.

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<v Speaker 2>The most valuable company on the foot see one hundred.

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<v Speaker 2>What it's saying this morning is that it's going to

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<v Speaker 2>almost double sales to eighty billion dollars by twenty thirty.

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<v Speaker 2>It's going to launch twenty new medicines by the end

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<v Speaker 2>of the decade as well. We're joined by Aaron Hannah Saren,

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<v Speaker 2>the company's CFO, to discuss these targets. Good morning, Very

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<v Speaker 2>nice to have you on the program. You've got a

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<v Speaker 2>busy day coming up, so we're really gratefully spending some

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<v Speaker 2>time with us this morning to lay out what you

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<v Speaker 2>are seeing over the next ten years. The eighty billion

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<v Speaker 2>revenue target that you've announced this morning implies kind of

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<v Speaker 2>seven eight percent top line growth during that period. The

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<v Speaker 2>market doesn't see you generating those sort of numbers, or

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<v Speaker 2>hasn't up until now. What is the market missing about

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<v Speaker 2>the potential this company has that will get it to

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<v Speaker 2>those kinds of growth rates.

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<v Speaker 3>Thanks for having me. That's exactly why we're actually hosting

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<v Speaker 3>this investor day here today at the DISK. We are

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<v Speaker 3>very excited about this bold ambition that we've set for

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<v Speaker 3>twenty thirty, and it's actually not just one medicine but

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<v Speaker 3>a whole portfolio of medicine that we will highlight. The

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<v Speaker 3>breadth and scope of our medicines is truly incredible, and

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<v Speaker 3>it ranges everything from oncology and rare diseases to the

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<v Speaker 3>medicines in biopharma for metabolic disorders as well as respiratory

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<v Speaker 3>And the growth that we anticipate is both from existing

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<v Speaker 3>products as well as the twenty new medicines that we

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<v Speaker 3>expect to launch by twenty thirty.

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<v Speaker 2>It's really interesting you haven't included obesity in that list.

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<v Speaker 2>Maybe you come back and discuss that in just a moment,

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<v Speaker 2>but oncology clearly absolutely front and center as we work

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<v Speaker 2>our way through this period. How big is oncology going

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<v Speaker 2>to be for astrosenica as we get to the end

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<v Speaker 2>of this period, how big a slice of the pie

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<v Speaker 2>is oncology going to represent.

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<v Speaker 3>You know, oncology continues to grow very strongly today. Oncology

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<v Speaker 3>is about forty percent of the business, and we expect

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<v Speaker 3>very strong double digit growth in oncology, both in new

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<v Speaker 3>medicines as well as our existing medicines and new indications

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<v Speaker 3>for those medicines. Overall, we have over one hundred and

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<v Speaker 3>twenty Phase two and three studies going on for our medicines,

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<v Speaker 3>and again we're working on a whole bunch of new

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<v Speaker 3>medicines that you'll hear about today.

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<v Speaker 1>Rathern I talk to us a little bit about your

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<v Speaker 1>manufacturing plans here. Recently there have been investments in facilities

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<v Speaker 1>in Dunkirk, Singapore, Liverpool, even Maryland as well. In light

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<v Speaker 1>of some of the kind of crackdown that US regulatory

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<v Speaker 1>authorities are putting in terms of where supply chains extend

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<v Speaker 1>into Asia. How is Astroseneca tackling that manufacturing story.

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<v Speaker 3>So our manufacturing investments are very strategic. They are aligned

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<v Speaker 3>very much with the new modalities and the new technologies

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<v Speaker 3>that we have in our pipeline. So the announcement, for

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<v Speaker 3>example in Maryland is for cell therapy products, which we

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<v Speaker 3>see as sort of a completely new modality that will

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<v Speaker 3>change how cancer care and autoimmune diseases are treated. What

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<v Speaker 3>we announced a couple of days ago in Singapore is

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<v Speaker 3>for antibody drug conjugates. We expect that antibody drug conjugates

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<v Speaker 3>will replace traditional chemotherapy over the next decade, and so

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<v Speaker 3>we're making these investments ahead of what we see coming

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<v Speaker 3>in our pipeline because we know that these medicines have

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<v Speaker 3>the potential to be very large medicines.

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<v Speaker 1>Well, speaking of your pipeline and these targets, even just

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<v Speaker 1>in terms of releasing the new twenty medicines, you're looking

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<v Speaker 1>at between twenty thirty. That's already beating some of the

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<v Speaker 1>estimates that you had laid out. I want to say

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<v Speaker 1>just a couple of months ago.

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<v Speaker 3>Rather, I talk to us.

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<v Speaker 1>A little bit about the buyback story here. Some of

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<v Speaker 1>your peers are executing some really big buybacks at this time.

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<v Speaker 1>If you're looking to have this much success in the

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<v Speaker 1>next five ten years, where do you stand on returning

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<v Speaker 1>some of that capital to shareholders.

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<v Speaker 3>So our capital allocation priorities haven't really changed. First and foremost,

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<v Speaker 3>the capital allocation is back investment into the business. We

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<v Speaker 3>continue to invest, as you mentioned in capital plans, to

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<v Speaker 3>sustain that growth, but also we invest somewhere between low

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<v Speaker 3>twenties percentage of our revenue in R and D our.

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<v Speaker 3>Second is to maintain a strong investment grade rating. We

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<v Speaker 3>had taken on significant amount of debt as we did

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<v Speaker 3>the Alexion transaction back in twenty twenty early twenty twenty one,

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<v Speaker 3>and we've reduced that leverage and today's standard under two

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<v Speaker 3>times leverage. Thirdly, we are returning capital to shareholders. At

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<v Speaker 3>our recent Animal meeting, we announced an increase in our dividends,

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<v Speaker 3>So dividend is generally our way to return capital to

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<v Speaker 3>shareholders as well as obviously capital appreciation we have not

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<v Speaker 3>historically done by BA and again we look at total

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<v Speaker 3>shareholder returns, so the appreciation in the stock as well

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<v Speaker 3>as the return of capital via dividends.

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<v Speaker 4>Rather than good morning. So you can ask you about

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<v Speaker 4>obesity drugs. Clearly you've been very successful in oncology and

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<v Speaker 4>the businesses has focused on that and on other areas,

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<v Speaker 4>but around obesity, that's where a lot of the market

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<v Speaker 4>chasser and excitement has been of late. What is Astra's

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<v Speaker 4>plan when it comes to obesity.

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<v Speaker 3>So we have an oral molecule and oral GLP one

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<v Speaker 3>that we're working on. We are going to begin various

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<v Speaker 3>two different phase twos this year. In addition, we have

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<v Speaker 3>an earlier molecule, which is long acting amulon. Both of

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<v Speaker 3>those mechanisms are targeting weight management, and most importantly are

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<v Speaker 3>strategies actually to combine them with agents that help with comorbidity.

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<v Speaker 3>So in addition to weight management, many of these patients

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<v Speaker 3>actually have heart disease or kidney disease, or hypertension or

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<v Speaker 3>hygh cholesterol. So it's really being able to provide a

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<v Speaker 3>single solution and single oral solution for these patients. And

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<v Speaker 3>that's really what we're focusing on, and we're going to

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<v Speaker 3>do studies that show the outcomes with these drugs are

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<v Speaker 3>very beneficial. So that's the hope and expectations for the

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<v Speaker 3>weight management projects that we have in our pipeline.

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<v Speaker 4>Rather, we've talked about the production facilities that you have

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<v Speaker 4>in lots of different parts of the world. Clearly a

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<v Speaker 4>very global business still based in the UK, and you're

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<v Speaker 4>coming to us from I know your R and D

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<v Speaker 4>facility in Cambridge. How committed to a UK listing is

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<v Speaker 4>a business like Astraseneca? Do you think is much talked

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<v Speaker 4>about here at the moment about certain very high profile

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<v Speaker 4>businesses thinking about possibly listing elsewhere in the United States,

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<v Speaker 4>for example.

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<v Speaker 3>Well, we're very happy with our primary listing here in

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<v Speaker 3>the UK. As you mentioned, I am here at our

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<v Speaker 3>Discovery Center, which is called the DISC in Cambridge. This

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<v Speaker 3>is a brand new facility and really state of the art,

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<v Speaker 3>and we have over twenty two hundred scientists working here

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<v Speaker 3>for treatment for cancer. We do expect that our portfolio

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<v Speaker 3>of medicines in oncology, for example, will be able to

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<v Speaker 3>potentially treat over half of all potential cancers by twenty thirty.

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<v Speaker 3>So again we have very ambitious targets, not just financial,

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<v Speaker 3>but also in the way we're transforming care.

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<v Speaker 2>Carry on the conversation and talk more about geography. The

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<v Speaker 2>United States has its biosecure acts which it's pushing through

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<v Speaker 2>now the UK there are rumblings about something similar. Asta

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<v Speaker 2>is a company that has invested heavily in China. Are

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<v Speaker 2>these issues going to become more problematic? Is that investments

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<v Speaker 2>in China going to become more difficult? Are you worried

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<v Speaker 2>that the UK may ultimately go down the same route

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<v Speaker 2>that we're seeing with the United States and its relations

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<v Speaker 2>to China.

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<v Speaker 3>We have a very large and successful business in China,

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<v Speaker 3>as you mentioned, and not only is it a commercial business,

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<v Speaker 3>but I think because of our standing and history in China,

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<v Speaker 3>we do have access to a lot of research that

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<v Speaker 3>is also coming out of China, and we've done licenses

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<v Speaker 3>and partnerships and BD transactions with companies with innovative companies

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<v Speaker 3>in China. We've also invested in manufacturing in China. But again,

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<v Speaker 3>our supply chains are very robust. Those were tested during

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<v Speaker 3>COVID and we did not miss a single dose for

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<v Speaker 3>a single patient across the globe. But also they're segregated

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<v Speaker 3>in ways, so for example, some of the facilities that

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<v Speaker 3>we have in China actually supplied China for China or

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<v Speaker 3>in the emerging market. So I think we try to

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<v Speaker 3>manage our entire supply chain network so it is very

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<v Speaker 3>mitigated from a risk standpoint.

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<v Speaker 2>This is a slightly left field question, but I'm going

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<v Speaker 2>to pose it anyway. UK universities are really struggling with

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<v Speaker 2>foreign students right now, and how we deal with foreign

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<v Speaker 2>students here in the UK is becoming a sort of

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<v Speaker 2>hot political issue. How much does do Zenica rely on

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<v Speaker 2>foreign students coming through places like Cambridge in terms of

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<v Speaker 2>providing the knowledge base that you ultimately rely on to

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<v Speaker 2>invent to create new drugs.

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<v Speaker 3>Well, I count comments specifically on foreign students or not,

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<v Speaker 3>but we do have a very large program to support

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<v Speaker 3>the university. So for example, here in Cambridge we work closely,

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<v Speaker 3>very much with the university. Here we also have a

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<v Speaker 3>pH d student program where we provide internships for those

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<v Speaker 3>PhD students and not just again in Cambridge, but across

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<v Speaker 3>the UK. So again our intention is to support science

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<v Speaker 3>and to support research regardless of where those students come

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<v Speaker 3>from and really help, okay you know, develop the best

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<v Speaker 3>medicines rather.

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<v Speaker 4>Thank you very much, aradan As Saarmy and astro Zenica

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<v Speaker 4>CFO joining us there