Drug developer AstraZeneca (AZN) is at an inflection point, says well-known fund manager Neil Woodford. He believes growth is now beginning to emerge.

This comment followed news last week from AstraZeneca which guided for full year earnings to be towards the ‘favourable end of a low to mid-teens percentage decline’.

The company’s adjusted pre-tax profit has steadily declined for many years and is forecast to bottom out at $5.12bn in 2018, according to Thomson Reuters’ data. It is then forecast to rise to $6bn in 2019 and $7.5bn in 2020.

Investec analyst Andrew Whitney is optimistic about AstraZeneca’s ‘rich product pipeline’ and flags several potential drug approvals by the US Food and Drug Administration over the next six months.

Berenberg analyst Alistair Campbell says management want to improve operating margins. ‘AstraZeneca is approaching the end of its patent cliff and sales should stabilise through 2017/18. New product launches should then underpin a prolonged period of substantial growth,’ he comments.

‘The oncology franchise is the most important sales driver in our forecasts. The rise of oncology should ultimately help AstraZeneca’s margins rebound towards peer-average levels of 35%. As a result, we expect strong double-digit earnings growth beyond 2017, which is not reflected in the valuation.’ (LMJ)

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