ASTRAZENECA (AZN) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did AstraZeneca shares perform in 2025?

AstraZeneca plc (LSE: AZN), one of the UK’s largest pharmaceutical and biotechnology companies, experienced a year of stable to modestly bullish performance in 2025. UK investors closely tracked both its research and development (R&D) pipeline progress and earnings resilience amid economic pressures. The stock maintained its defensive characteristics, with relative outperformance compared to the broader FTSE 100 index, which faced headwinds from interest rate uncertainties and geopolitical tensions.

AZN shares opened January 2025 at just under £110 and closed the year near £120, reflecting a year-to-date gain of approximately 9%. Volatility remained restrained as the company focused on strategic partnerships, commercial drug expansions, and continued development of its oncology and rare disease pipeline.

Much of the stock’s support stemmed from AstraZeneca's deep portfolio of high-growth therapies. Oncology, a dominant revenue contributor, accounted for over 35% of total sales, driven by continued uptake of drugs such as Tagrisso and Imfinzi. Cardiovascular, renal and metabolic (CVRM) therapies showed consistent revenue growth, particularly in response to new guidelines for chronic kidney disease and heart failure treatment options in the UK.

The UK pharmaceutical landscape received regulatory clarity from the Medicines and Healthcare products Regulatory Agency (MHRA) in 2025, which benefited AstraZeneca’s timelines and reduced uncertainty for drug applications. Moreover, continued alignment with the EU through the Windsor Framework helped enhance the predictability of drug approvals and post-Brexit trade standards.

AstraZeneca also bolstered its digital transformation strategy during 2025, introducing AI-led solutions in clinical trials and data analytics. These initiatives helped enhance productivity and reduce development costs. AstraZeneca’s announcement of additional investments in UK-based R&D centres served as a bullish indicator for its domestic growth aspirations and investor confidence.

Despite macroeconomic challenges, including inflationary pressures and NHS budget constraints, AstraZeneca’s strong gross margins (above 80% across key product lines) and robust cash flow enabled sustained shareholder returns. Dividend payouts were increased modestly in line with earnings growth and the firm engaged in periodic share repurchases to boost shareholder value.

Public sentiment toward the biotech sector remained buoyed by post-Covid optimism, underpinned by AstraZeneca’s continued contributions in vaccine development and infectious disease research. Regulatory fast-tracks also supported pipeline acceleration, a favourable environment for incumbents like AZN.

Altogether, AstraZeneca maintained a solid footing throughout 2025, underpinned by innovation-led growth and operational resilience, making it a favoured pick among institutional UK investors seeking defensiveness and long-term compounders.

Which factors drove AstraZeneca’s success in 2025?

Performance of AstraZeneca shares in 2025 was underpinned by key business drivers and operational milestones. Several strategic and macroeconomic factors played a role in supporting investor confidence and driving share price appreciation across the year.

1. Sustained R&D Productivity

One of the most significant growth catalysts in 2025 was continued success in AstraZeneca’s research and development (R&D) efforts. The company announced positive Phase III results for multiple drugs spanning oncology, respiratory, and immunology indications. Notably, the development of datopotamab deruxtecan (for non-small cell lung cancer) in partnership with Daiichi Sankyo reached late-stage regulatory submission, drawing investor attention for its blockbuster potential.

Further, the company’s rare disease business, bolstered by the 2021 Alexion Pharmaceuticals acquisition, delivered robust performance. With multiple high-value therapies for conditions such as paroxysmal nocturnal haemoglobinuria (PNH) and lupus nephritis gaining traction, this business segment served as a key revenue pillar in 2025.

2. Therapies and Pipeline Advancements

Tagrisso, Lynparza, and Farxiga remained the cornerstone therapies driving market growth. Farxiga, in particular, saw regulatory expansions that promoted increased usage in chronic kidney disease (CKD) treatment guidelines in the UK and Europe. The company also significantly expanded its respiratory product pipeline with a focus on biologics targeting asthma and COPD.

AstraZeneca's commitment to ESG-compliant operations and carbon neutrality further attracted long-term institutional capital. Environmental and governance initiatives contributed not only to branding benefits but also qualified AstraZeneca for inclusion in several UK-based sustainable investment indices.

3. Strategic Partnerships and Joint Ventures

2025 saw AstraZeneca forming strategic partnerships with biotech innovators and academic health centres across the UK. Collaborative projects with institutions like the University of Cambridge aimed to accelerate early-stage oncology diagnostics and AI drug discovery programmes. These alliances not only broadened its innovation pipeline but also deepened domestic stakeholder engagement beneficial to its UK footprint.

AstraZeneca also launched manufacturing initiatives to localise biologics and mRNA drug production within the UK, reflecting a strategic response to post-Covid supply chain vulnerabilities. The company was incentivised through government-backed industrial strategy schemes, which further solidified its UK-based expansion plans.

4. Dividend and Shareholder Value Initiatives

Shareholders benefited from AstraZeneca’s reliably increasing dividend policy. In February 2025, the company approved a 6.5% dividend increase, supported by operating cash flows exceeding £8.5 billion. Buybacks totalling £1.4 billion added another dimension to return enhancement, which helped maintain AZN’s appeal among income-focused UK investors.

This combination of deepened pipeline strength, resilient financial performance, and strategic UK focus positions AstraZeneca as an attractive option both for institutional holders and public ISA/pension savers.

What are the risks and watch items for 2026?

Looking ahead to 2026, AstraZeneca’s investment thesis in the UK remains largely positive, though not without potential risks and hurdles. As with all pharmaceutical firms, product cycles, regulatory changes, and litigation developments could influence AZN’s performance.

1. Patent Expirations & Competitive Pressures

One of the foremost risks entering 2026 is potential revenue headwinds from approaching patent cliffs. While core oncology assets like Tagrisso and Lynparza remain patent-protected in major markets, investors will be monitoring upcoming expiry timelines toward the later part of the decade. The possibility of biosimilar introductions in emerging markets and relaxed exclusivity licences elevate long-term competitive risks.

Intensifying competition from Pfizer, Merck, and other multinational pharma players in oncology and rare diseases poses another risk to AstraZeneca’s dominance in some key segments.

2. Regulatory and Political Environment

Uncertainty around post-Brexit regulatory harmonisation remains. Although the Windsor Framework has thus far aided UK-EU alignment, any deviation in drug approval processes or health data sharing agreements in 2026 could pose compliance burdens. Also, upcoming NHS budget announcements and potential shifts in government health policy following the next general election are risk considerations, particularly for high-cost therapies.

3. R&D Success Rate and Costs

Despite a strong pipeline, drug development is inherently risky. Failures in Phase II/III trials or regulatory rejections can reverse investor sentiment swiftly. AstraZeneca's ongoing mRNA and gene therapy projects, while promising, carry high R&D costs that could affect margins if commercial success is delayed.

R&D intensity levels reaching approximately 24% of revenue in 2025 may climb further, testing operational efficiencies without assurances of output.

4. Economic and Currency Factors

Inflation, interest rate direction, and geopolitical volatility continue to influence investor outlooks in the UK equity market. Although AstraZeneca earns a large portion of revenue in USD, GBP volatility still affects earnings translation and investment flows. A weakening pound, though export-friendly, could pressure domestic input costs and wages.

What to watch in 2026:

• Major clinical trial updates, especially in oncology and respiratory categories
• Progress in gene therapy and mRNA delivery pipeline
• Regulatory clarity post-2026 NHS consultations
• Capital allocation strategies including M&A or divestitures
• Dividend guidance and shareholder return frameworks

Conservatively, analysts project AstraZeneca could post 6-8% earnings per share (EPS) growth in 2026 contingent upon pipeline milestones and continued expansion in global and UK markets. Valuation remains at a premium relative to peers due to superior cash flow generation and lower correlation to cyclical sectors. As a core holding in UK pension and ISA portfolios, AZN remains one of the top defensive equity exposures with strategic upside anchored in science and sustainability.