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AstraZeneca (AZN) Risk Analysis
Risk Overview Q4, 2024
Source: the company's latest filing for the period ended Dec 31, 2024, filed Feb 18, 2025
Risk Change Over Time
- Accounting & Financial Operations - Risk 1Failure in internal control, financial reporting or the occurrence of fraud
Effective internal controls assist in the provision of reliable financial statements and the detection and prevention of fraud. Testing of internal controls provides only limited assurance over the accuracy of Financial Statements and may not prevent or detect misstatements or fraud. The introduction of new legislation such as the failure to prevent fraud offence in the Economic Crime and Corporate Transparency Act (effective from September 1, 2025) may increase regulator focus on fraud. Significant resources may be required to remediate any deficiency in internal controls. Any such deficiency may trigger related investigations and may result in fines being levied against individual directors or officers. Serious fraud may lead to prosecution of senior management. Any of the foregoing could adversely affect our financial results and lead to reputational damage.
Risk Highlights Q4, 2024
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 19
- Regulation - Risk 1Reliance on third-party goods and services
A significant proportion of AstraZeneca’s annual costs relates to spend with third-party suppliers. The level of spend supports the length of our value chain from discovery to manufacture and commercialisation of our medicines. Many of our business-critical operations are outsourced to third-party providers. We are, therefore, heavily reliant on these third parties to get medicines to patients, comply with applicable laws and regulations, while also ensuring prudent use of AstraZeneca financial resources. Failure to successfully secure, onboard and manage outsourced services, particularly with continued inflationary pressures, or the failure of outsourced providers to deliver timely services, and to the required level of quality, could materially adversely affect our reputation, our financial condition and operating results as well as our ability to deliver medicines to patients. Failure to effectively manage third-party suppliers when external factors, including geopolitical tensions or raw materials and components shortages, place increased pressure on AstraZeneca’s ability to purchase goods and services may lead to major business disruption. Any breach of security, whether physical, cyber or data related, or failure of these third parties to operate in a way that is consistent with laws or regulations, may lead to regulatory penalties, materially affect the results of operations and adversely impact our reputation.
- Regulation - Risk 2Failure to meet regulatory or ethical requirements for medicine development or approval
We are subject to laws and regulations that control our ability to market our pharmaceutical products. Our development programmes must meet many standards to prove our products are safe, effective and of high quality. Health authorities, such as the FDA in the United States and the European Medicines Agency in the European Union, can refuse to approve our products or require us to conduct additional clinical trials or scientific testing before they will approve them for marketing. Many factors influence health authority decisions to approve or reject a marketing application for a pharmaceutical product. These include advances in science and technology, new laws, regulations and policies, and different standards for evaluating safety and effectiveness. Delays in regulatory approvals could delay our ability to market our products and may adversely affect our revenue. Also, post-approval requirements, including additional clinical trials, could cause increased costs. We seek to manage these risks, but policymaking by governments and health authorities can be unpredictable and unforeseen circumstances, such as public health emergencies, may strain health authority resources and delay the approval of our products. Following approval, a health authority may require us to conduct additional clinical trials or scientific testing to address concerns raised after patients have used our products in the marketplace. New data may impact a product’s approval status or lead to labelling changes that limit the use of a product.
- Regulation - Risk 3Pricing affordability, access and competitive pressures
At AstraZeneca, our approach to pricing balances the priorities of patients, their physicians, payers, society and our business. Our four guiding principles – Access, Value, Sustainability and Equity – aligned to our overarching company values, form the cornerstones of our brand pricing strategies. Our prices are rooted in the assurance of our high-quality science, and the benefit this brings to patients. They also reflect holistic value, in the context of healthcare systems and market dynamics, affordability and equity; so that we can adapt our prices across the more than 100 countries in which we operate and help support long-term healthcare system resilience. Our pricing approach, as described in the previous paragraph, is a key contributor to our success. However, there are various external risk factors that could compromise our ability to execute our pricing strategies as planned. The market access environment is highly complex and subject to dynamic economic, political and social pressures. Globally, there are increasing cost-containment measures, greater calls for net price and R&D cost transparency, as well as early discussions toward pooled procurement mechanisms beyond emergency countermeasures and essential medicines. We have also experienced the first round of drug pricing system reforms in the United States, with associated uncertainty on the long-term impact. Continued deterioration of, or lack of improvement in, socioeconomic conditions could adversely affect supply and/or distribution in affected countries and the ability or willingness of customers to purchase our medicines, putting pressure on price and/or volumes. This could adversely affect our business or results of operations, for example, those healthcare systems most severely impacted by downturn may seek alternative ways to settle their debts at a discount. Other customers may cease to trade, which may result in losses from writing off debts or a reduction in demand for products. Across the industry, the Inflation Reduction Act (“IRA”) in the United States and joint procedures to evaluate comparative clinical effectiveness in the European Union could reduce the value of certain products sooner than planned and impact the R&D pipeline as companies seek to avoid investing in lower yield products.
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