AstraZeneca’s (NYSE:AZN) Cancer Drug to be a Growth Driver After EU Approval

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AstraZeneca plc (ADR) (NYSE:AZN)

AstraZeneca (NYSE:AZN) should be a happy lot after regulators in Europe gave their approval to its lung cancer drug, Tagrisso. Tagrisso has the potential to be a key growth driver almost immediately for the pharma company. AstraZeneca considers Tagrisso to be a top seller in its portfolio though some analysts have their own doubts about its potential.

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AstraZeneca’s lung cancer drug was the first to focus on a subset of patients that develop a treatment-resistant mutation known as T790M. Lung cancer is the most common type of cancer and considered one of the deadliest. Tagrisso is the first drug to get accelerated approval from the European Medicines Agency. However, the FDA in the United States gave a green light to Tagrisso two months ago.

In 2013, the drug reached its first human trials and since then has witnessed accelerated development. The company submitted two phase 2 trial results based on a total of 474 patients enrolled. The trials indicated that the drug shrank tumors in 66% of cases. AstraZeneca is also conducting the final phase trials for Tagrisso to collect additional data on efficacy and safety.

Potential Revenue Generation

AstraZeneca thinks that the lung cancer drug has the potential to generate revenue of $3 billion in sales per year. In 2014, the company achieved total revenue of about $26 billion and planned to reach $45 billion by the turn of 2023. The drug should help the firm in achieving its ambitious target, at least to some extent.

However, some analysts appeared to be cautious on the potential sales numbers. For instance, Citigroup Inc (NYSE:C) analyst Andrew Baum, expects Tagrisso to fetch sales of $1 billion by the end of the decade. In any case, it will contribute to the company’s growth. By how much is the question.

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