AstraZeneca SWOT & PESTLE Analysis

Strength

1. Ranked first in the Innovation Index: In 2018 AstraZeneca topped the Pharmaceutical Innovation Index released by IDEA pharma for the first time leading behind industry leaders such as Johnson&Johnson, Pfizer, Abbot, Novartis, Bayer, Sanofi, Glaxo Smith Kline and many others, AstraZeneca topped the ranking even though they were ranked on the 15th spot in 2017, this comes on the back of some key strategic decisions taken by the management at AstraZeneca that helped to pipeline the positive data and ideas and stem the company’s downward trend because of the loss of several exclusive products between the year 2011 and 2017. AstraZeneca was considerably behind in developing cancer immunotherapy drugs which the market leaders such as Merck, Roche and Bristol-Myers were also competing for but the successful test trials by AstraZeneca could give it a major advantage. The main reason that AstraZeneca topped the Pharmaceutical Innovation Index in 2018 from the 15th position was the launch of five new significant medicines in 2017 primarily across their therapy areas which are no mean feat for a company in the industry. Astrazeneca dropped two spots from the 6th rank in 2019, to the 8th rank in 2021. In 2020, Astrazeneca ranked 1st in the Invention Index due to their COVID-19 research and efforts.

2. High percentage of R&D expenditure amongst the industry leaders: In absolute spending on R&D AstraZeneca ranks at the 6th spot overall in the pharmaceutical industry in Financial Year 2017 despite being much smaller in size in terms of revenue than some of its competitors, it outperforms Bristol-Myers Squibb, Sanofi and GlaxoSmithKline all of which have a higher revenue than AstraZeneca, this comes on the back of a decline in revenue in 2017 by more than 2% than that in 2016, but the company showed positive results in the Q4 of FY 2017 where its revenue grew by 3% than that in Q4 of FY 2016. On an average the top ten Pharmaceutical companies by their market capitalization shelled out 17% of their revenues on R&D, whereas AstraZeneca proved to set the benchmark in this aspect as they spent just more than 25% of their revenues, this comes at a time when the total spending on R&D by the top 10 companies combined stood at $ 70 Billion in 2017 which has been stagnant for the past 5 to 6 years as the total spending of $ 70 Billion was spent in 2011 and 2012. In 2020, Astrazeneca’s R&D spending increased by 21% from their spending in 2019. The pharmacy company Roche invested the most overall but Astrazeneca saw the biggest jump in spending and it also invested the most as a percentage of their sales (24.8%).

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

1. Aging population will lead to higher growth opportunities: Several developed and developing countries have a high average age of the population which in the coming years will be beneficial for the pharmaceutical industry as more the age the higher the spending gets on healthcare. The revenue earned by the pharmaceutical industry worldwide in 2020 was $1228.45; significant revenue comes from only 4 geographical markets that are the USA, China, Europe and Japan with each contributing $370 Billion, $145 Billion, $188 Billion and $84 Billion respectively. The USA, China and Europe have an average age of population ranging between 36 to 39 years where it is expected that the average age of the population will reach 50 years by the year 2045 and this will give a major boost to the pharmaceutical industry just like Japan’s (average age-47) pharmaceutical market is huge considering the relatively small population of the country when compared to the USA, China and Europe.

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Technological

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Legal

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Environmental

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