Drug giant AstraZeneca PLC (LON:AZN) is currently within striking distance of a £100bn market cap, and is expected to grow further according to estimates from some analysts.

In a note on Wednesday, analysts at Liberum upped their price target for the group to 8,300p from 8,250p and retained their ‘buy’ rating, forecasting that over the next five years the FTSE 100 firm will add over US$13bn (£10.1bn) in annual sales.

The broker also said the firm is now set for earnings growth until 2028, “significantly ahead of peers”.

Liberum analyst Alistair Campbell added that the broker’s new target, a 10% premium on AZ’s current share price 7,502p, was a “conservative” estimate as it did not factor in any of the drugs in the company’s early stage drug pipeline.

The company’s turnaround can be seen as a vindication for chief executive Pascal Soriot, who since taking the helm in October 2012 has seen the stock rocket 161%, adding around £61bn to its market valuation.

It is also a far cry from 2014, when AZ was battling for its very survival against a hostile £69.4bn takeover offer from US drugs giant Pfizer Inc (NYSE:PFE) amid declining sales and a looming ‘patent cliff’ that would open up generic competition against some of its leading medicines including cholesterol treatment Crestor and indigestion drug Nexium.

However, after successfully convincing the City to back his plans for the group, Soriot has managed to restore the company’s fortunes, with its third quarter results in October revealing sales that were 13% higher year-on-year at US$17.3bn alongside a US$1.88bn in core operating profits, 43% higher than a year ago.

Blockbuster drug pipeline

Speaking to Proactive, Campbell said one of the core element of AZ’s turnaround has been the renewed success of its research and development (R&D) pipeline, with five new medicines expected to be ‘blockbusters’ (drugs that generate at least US$1bn in revenue annually) in its current financial year.

These include Roxadustat, a treatment for anaemia, which according to analysts at broker Shore Capital could generate US$5bn in annual revenues.

The company has also seen success in the oncology field, with sales of ovarian and breast cancer drug Lynparza surging 93% to US$520mln in its latest first half, while Imfinzi, a treatment for lung and bladder cancers, saw an increase of 244% to US$633mln in the same period. In total, the group’s oncology drugs now encompass over one third of sales.

“AZ had a reputation for making significant mistakes in R&D,” Campbell said, however during his tenure, Soriot had accelerated a process of root and branch overhaul, which had “genuinely changed the output from the organisation”.

Expanding markets

Another aspect of AZ’s renewed success has been its pivot towards emerging markets and away from developed countries such as the US where pharma firms usually make most of their money.

Since Soriot took over as CEO, the group’s sales in China, the world’s second largest pharmaceutical market have more than doubled, while in its latest first half sales in Russia expanded 67% to US$112mln.

Spinning out

While AZ’s earning story may seem to be one made up solely of additions, be it new markets or new drugs, Soriot has also tried to trim down some of the company’s excess by spinning out various non-core drug developments into separate entities.

One such group is US-listed Viela Bio Inc (NASDAQ:VIE), which was created in 2018 after AZ spun out six of its early-stage experimental drugs focused on severe autoimmune diseases.

At the time, Soriot said the move would reduce a pipeline that was “over-sized relative to the current size of our company”. He has also spearheaded a number of other asset sales and partnerships that had generated around US$2.3bn in revenues for the prior year.

Since its initial public offering (IPO) at the end of August, where it raised US$150mln, Viela’s shares have risen around 55% to US$29.6 from their initial float price of US$19.

It also isn’t the first time Soriot has orchestrated a spin-out to prune the firm’s operations, having previously split off antibiotic specialist Entasis Therapeutics Holdings Ltd (NASDAQ:ETTX), although this firm has had slightly less success with the stock currently at US$4.60, down 69% on its IPO price of US$15.