AstraZeneca Just Massively One-Upped Pfizer. Here’s What It Means for the Stock

AstraZeneca Just Massively One-Upped Pfizer. Here’s What It Means for the Stock

As two of the world’s largest and most prolific drug manufacturers, Pfizer (NYSE:PFE) And AstraZeneca (NASDAQ:AZN) both have big visions on how to grow even more in the years to come. And with billions of dollars spent on research and development, it is almost certain that it will lead to the discovery of valuable new drugs that should enrich shareholders.

But for investors, the details of how those billions will be spent and how the winning therapies will be found are key. And based on that, it appears investors will like AstraZeneca’s plans more than Pfizer’s. Let’s see why this is the case.

These ambitions are bigger and better

Pfizer’s 2030 strategic plan is to grow total revenue by at least $45 billion, using a combination of internal measures research and development (R&D) and business development activities such as acquisitions, licensing agreements, collaborations and the purchase of attractive pharmaceutical assets.

Although the vision calls for continuing to compete in many of the same segments as before, cancer drugs are a particular area of ​​focus. If all goes as planned, the company will produce at least eight new blockbuster drugs before the end of the decade.

In 2023, Pfizer generated $58.5 billion in revenue. Its objective is therefore to reach a turnover of 103.5 billion dollars. That means it hopes to return to the glory days of 2022, when annual revenue was just over $100 billion thanks to incredible demand for its coronavirus vaccines and antiviral pills. However, it will take years of focused efforts to surpass its all-time highs in sales.

On the other hand, AstraZeneca’s latest strategic plan is even more ambitious. Its revenue was $45.8 billion in 2023; management now hopes to reach a sum of $80 billion by 2030, launching at least 20 new drugs along the way. Twelve of these new drugs each have the potential to generate at least $5 billion in sales each year.

If management is to be believed, the company won’t need to do much to achieve its goals other than executing on its core pipeline as it exists today. Cancer drugs, rare disease therapies and biologics will be the priority segments.

And while there are plans for collaborations, acquisitions and licensing deals along the way, AstraZeneca’s overall approach does not emphasize the need to do deep business development work. So it probably won’t need to take on a lot of debt, leaving it with more capital to invest in growth, or return to shareholders, for years to come.

To see how this will play out for AstraZeneca compared to Pfizer, take a look at this chart (can you guess when Pfizer started taking steps to acquire companies as part of its strategic roadmap?):

AstraZeneca Just Massively One-Upped Pfizer. Here’s What It Means for the Stock

Graph of total long-term debt of the PFE (quarterly)

Eventually, this money will have to be repaid, and the process will likely be lengthy. AstraZeneca will not have this challenge and will likely also have more high-profile drugs on the market by 2030.

Don’t get too lost in the weeds here

All of the above factors mean that AstraZeneca’s stock is likely to sustainably outperform Pfizer’s if its clinical trials go as planned and ultimately result in profitable drugs.

Direct competition between companies, most likely in the area of ​​cancer antibody-drug conjugates (ADCs), could allow one of them to gain the upper hand in its specific market shares. But from an investment perspective, AstraZeneca still looks more favorable.

Conducting extensive business development activities to keep the pipeline full of promising programs is nothing new in the pharmaceutical industry. But need Doing so, as Pfizer executives seem to think, shows a subtle lack of confidence in the consistency of the company’s pipeline (both in volume and quality). And there’s nothing more essential to a pharmaceutical company than a healthy pipeline.

So, given the ambitions of these companies, it is safer to buy shares of AstraZeneca than Pfizer over the next few years. Pfizer’s big project is unlikely to fail. But – especially if you’re looking to invest in something that’s going to grow consistently – it now looks like AstraZeneca is a better option.

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool holds positions at and recommends Pfizer. The Motley Fool recommends AstraZeneca Plc. The Mad Motley has a disclosure policy.

AstraZeneca has just massively outperformed Pfizer. Here’s what that means for the stock was originally published by The Motley Fool

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