The last few years have been challenging for Astellas (OTCPK:ALPMY) (4503.T), as this large Japanese pharmaceutical company has struggled to restructure an historically inefficient R&D organization and cope with the loss of patent exclusivity on multiple compounds. Assuming Astellas hits my revenue target for this current fiscal year (there’s one quarter left to report), the company will have generated only 1% revenue growth over the last seven years and none over the last six, though profitability has certainly improved (FCF up 9% annualized).
Relative to my last article, Astellas shares have certainly underperformed the S&P 500, but they have largely kept pace with the large drug sector.
What I think makes Astellas interesting today is the potential for meaningful revenue acceleration over the next three to five years, on the order of 6% to 7%, driven by expanded indications for Xtandi and contributions from multiple newer compounds. Much of this growth will be gated by successful clinical trials/FDA approvals, so by no means is it risk-free, but the opportunity here looks interesting today.
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