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AstraZeneca's Analytics Play

Published 06/13/2013, 10:42 AM
Updated 07/09/2023, 06:31 AM

AstraZeneca PLC (AZN) For investors, big data today offers more incentives and access to big data information. “Big data possibilities will soon lead to the elimination of most curable diseases. The crunching of all this big data is going to owe a lot to the cloud,” stated AstraZeneca's CTO, Angela Yochem at Computing’s 2013 Big Data Summit. AstraZeneca currently generates more medical data every two weeks "than is currently held in the US Library of Congress". Health-care expenses now represent 17.6 percent of GDP nearly $600 billion more than the expected benchmark for a nation of the United States’s size and wealth. Big data has arrived in biotechnology.

Based on a current price of $50.93, AstraZeneca is currently 2.1% above its average consensus analyst price target of $49.89. The stock should find initial support at its 50-day moving average (MA) of $47.37 and further support at its 200-day MA of $47.00. In the past 52 weeks, shares of AstraZeneca have traded between a low of $39.72 and a high of $51.13 and are now at $50.93, which is 28% above that low price. In the last five trading sessions, the 50-day moving average (MA) has remained constant while the 200-day MA has risen 0.3%.

Key Stock Data

  • Dividend Yield 7.40%
  • P/E Ratio 10.30 Trailing 12 months
  • Market Cap $63.75 Billion
  • Shares Outstanding 1.25 Billion
  • Public Float 1.25 Billion
Five-Day Change
AstraZeneca established a four-year partnership with WellPoint’s data and analytics subsidiary, HealthCore last year. The big data initiative was to determine the most effective and economical treatments for some chronic illnesses and common diseases. AstraZeneca will use HealthCore data, together with its own clinical-trial data, to guide R&D investment decisions. The company is also in talks with payors about providing coverage for drugs already on the market, again using HealthCore data as evidence.
Big Data And U.S. Healthcare
Last month AstraZeneca also initiated a major overhaul of its R&D and selling, general and administrative (SG&A) segments. As per the proposed plans, the company’s R&D activities will be primarily centered in three facilities including UK (Cambridge), US (Gaithersburg) and Sweden (Mölndal) Over the last decade, pharmaceutical companies have been aggregating years of research and development data into medical databases, while payors and providers have digitized their patient records.

Competitors Capture Value From Big Data
Eli Lilly & Co. (LLY) traded down 0.88% on Wednesday, hitting $57.49. Eli Lilly & Co. has a 52-week low of $39.16 and a 52-week high of $58.26. The stock’s 50-day moving average is currently $55.53. The company has a market cap of $62.873 billion and a price-to-earnings ratio of 15.85.

The company collaborated last year in big data to enable better decision-making in drug development with Quintiles. Eli Lilly was also an early adopter in pharma of Amazon's cloud computing infrastructure. A company committed to innovation, willing to build their capabilities, and open to a new view of value will likely be the first to reap the rewards of big data and help patients achieve better outcomes.

Merck & Co., Inc. (MRK) shares have been down 5%. Last year, Vytorin and Zetia generated $1.57 billion and $2.75 billion, or 9% of Merck’s total sales. Given its history of past drug failures, investors are losing confidence.

Merck & Co. also is involved in partnerships and collaborates with providers leveraging big data to gain valuable insights. At Merck & Co. Inc, data scientists are members of the drug discovery and development organization. Organizations that capitalize on big data stand apart from traditional data analysis environments moving analytics away from the IT function and into core business, operational and production functions.

What Is the Ppotential? Investors are optimistic about big data’s potential to transform health care but structural issues may pose obstacles. Privacy issues will continue to be a major concern. McKinsey estimates $300 billion to $450 billion in reduced health-care spending could be conservative, as many insights and innovations are still ahead.

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