AstraZeneca PLC's (LSE:AZN, NASDAQ:AZN) licensing deal on Friday signals a plausible effort by the FTSE 100 group to grab a piece of a booming market for obesity treatments, analysts said, with still plenty to go far despite the market currently being dominated by rivals Novo Nordisk and Eli Lilly.
The pharmaceutical group agreed to pay China’s CSPC Pharmaceuticals $1.2 billion upfront, with a further $3.5 billion in milestone payments, for rights to eight early-stage weight management and diabetes programmes, including a clinical-ready injectable drug expected to begin trials soon.
Analyst Dr Sean Conroy at Shore Capital said the move expands AstraZeneca’s stake in a market that is forecast to be worth more than $100 billion by 2030.
“Although AZN might be perceived to be behind Lilly and Novo Nordisk, we believe there’s still opportunity to disrupt this duopoly,” he said.
The deal gives the UK group access to CSPC’s LiquidGel technology, which allows for monthly injections, which is a potential competitive edge as patients seek fewer doses.
Joachim Klement at Panmure Liberum said this platform was a “key benefit" from the deal as it “can be deployed for Astra's other obesity drugs that are more advanced... serving a significant patient preference.”
While AstraZeneca shares trade at a premium to peers, Shore's Conroy see further upside given "broad blockbuster base and an enviable pipeline".
He sees fair value at 15,000p a share and believes a "premium rating can be justified, with the pipeline providing scope for rating expansion, particularly as the year ahead looks set to just as catalyst rich as 2025".
AZN shares fell at the open on Friday, but by early afternoon were up 0.8% at 13,564p.