AstraZeneca (AZN) is set to acquire U.S. biotech company FibroGen’s (FGEN) China unit for $160 million to expand its presence in the country. The transaction comes amid escalating trade frictions between the U.S. and China, following President Trump’s imposition of 10% tariffs on Chinese imports earlier this month. The deal is set to close by mid-2025, pending standard conditions and regulatory approval in China.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Details of the Deal
With this acquisition, AstraZeneca will get exclusive rights to market FibroGen’s anemia treatment, roxadustat, in China. Meanwhile, FibroGen retains control of roxadustat’s rights in the U.S. Notably, roxadustat leads its category in brand value for treating anemia in chronic kidney disease and is awaiting regulatory approval for use in chemotherapy-induced anemia.
On the other hand, FibroGen will use the funds from the sale to repay its term loan, simplifying its capital structure. These moves are expected to extend the company’s cash reserves until 2027. FibroGen will receive an enterprise value of $85 million plus about $75 million of its net cash in China.
AstraZeneca’s China Investigations
AstraZeneca’s latest deal comes despite facing a series of probes into its leadership and operations in China. In October, the company announced that its head of China operations, Leon Wang, had been detained by Chinese authorities. Analyst Simon Baker at Redburn Atlantic pointed out that the investigation has taken center stage in discussions, even though ideally it shouldn’t be the main focus.
In Q4 2024, AstraZeneca’s sales rose 25% to $14.9 billion, driven by strong demand in the U.S. and Europe. However, Q4 sales in China fell by 3% based on constant exchange rate.
Is AstraZeneca a Good Stock to Buy?
As per the consensus rating on TipRanks, AZN stock received a Strong Buy rating, supported by seven Buy recommendations. The AstraZeneca share price forecast stands at $89.94, signifying a potential upside of 22% in the share price.
