Improving sentiment towards the AstraZeneca (LSE: AZN) share price has helped the performance of the FTSE 100 stock this year.
The company has seen a dramatic improvement in its fortunes during the past five years. Indeed, a half-decade ago, the pharmaceutical group was facing a patent cliff where some of its most profitable treatments would lose manufacturing protection. This could have resulted in a significant decline in revenues.
Luckily, management turned things around. By investing in new treatments, signing joint ventures with other producers, and selling non-core assets, AstraZ’s outlook gradually improved.
And now the company is standing on the edge of what could be an extended growth spurt.
AstraZeneca share price performance
The pharmaceutical group has attracted plenty of attention this year, thanks to its coronavirus vaccine, which it’s developing with Oxford University. However, while this could be a profitable enterprise for the organisation, I think it’s just one string to its bow.
The oncology treatments pioneered by the group may yield greater profits. These treatments, which have already shown themselves to be effective in treating cancer, could generate billions in sales over their lifetimes, according to analysts. AstraZeneca owns the rights to a handful of these treatments, and the number is growing every day.
There are a couple of other reasons why I’m optimistic about the long-term outlook for the share price. All forecasts suggest spending on healthcare around the world is only going to increase. After a small decline in healthcare spending this year, outlay is expected to rebound nearly 6% to just under $9trn in 2021.
I think it’s highly likely the business’s bottom line will benefit from this tailwind.
What’s more, I mentioned above that AstraZeneca’s research and development efforts had helped growth in recent years. I see this trend continuing. The company has over 170 different treatments in its pipeline at present. And there are plenty more on the way. These will help fortify the group’s position in existing markets and take it into new arenas.
Investment potential
Thanks to the three tailwinds outlined, I’m optimistic about the long-term potential of the AstraZeneca share price. The company has faced some issues in the past, but these look to be well and truly behind the business.
Going forward, the company should benefit from its oncology treatments, the growth of the global healthcare sector and the rollout of new drugs. These trends should help support the organisation’s bottom line and dividend growth. At the time of writing, the stock supports a dividend yield of over 2%. So investors will be paid to hold the shares.
As the company’s bottom line expands, shareholders should also see capital growth. That’s why I think investors may benefit from owning the AstraZeneca share price in the long run.