AstraZeneca raises forecasts after seeing off Pfizer
Jul 31 2014 , London
Second-quarter sales and earnings both beat expectations, helped by several one-off factors, including a product-related payment from Pfizer worth $200 million.
Chief Executive Pascal Soriot has fought hard to demonstrate that AstraZeneca has a strong independent future and does not need the kind of mega-merger offered by its bigger U.S. rival.
He has gained credit for his firm's pipeline of promising new cancer drugs, while the respiratory business has been boosted by strong demand for Symbicort, which has taken business from GlaxoSmithKline's rival drug Advair.
AstraZeneca moved to boost its lung drug franchise further on Wednesday by acquiring rights to Spanish group Almirall's lung treatments in a deal worth up to $2.1 billion.
Sales in the quarter rose 4 percent to $6.45 billion, despite generic competition to some drugs, generating core earnings - which exclude certain items - up 8 percent at $1.30 a share.
Industry analysts, on average, had forecast sales in the quarter of $6.29 billion and earnings of $1.10 a share, according to Thomson Reuters.
“The pace of execution of our strategy and the underlying performance of our teams give us confidence to raise 2014 guidance for the full year,” Soriot said in a statement. “We now have one of the most exciting pipelines in the industry.”
Revenue in 2014 is now expected to be in line with 2013 at constant exchange rates - an increase on previous guidance of a low-to-mid single digit percentage decline - and core earnings per share are set for a low double-digit decline, against previous guidance of a percentage decrease in the teens.
Deutsche Bank analyst Mark Clark said the results represented a "big beat" but were flattered by one-time items and the increased outlook for the year was likely to be taken in its stride by the market.
Shares in the company were barely changed by 0750 GMT.
GENERIC NEXIUM DELAY
A raft of patent expiries will pressure sales and profits until at least 2017 but Britain's second-biggest pharmaceuticals group is currently enjoying a partial reprieve, due to the delayed U.S. launch of a generic form of heartburn pill Nexium.
AstraZeneca now assumes, for planning purposes, that generic versions of prescription Nexium will reach the U.S. market on Oct. 1.
India's Ranbaxy Laboratories holds the rights to sell the first generic copy of the popular drug but its continuing problems with meeting regulatory standards in manufacturing have delayed a launch.
AstraZeneca's quarterly results were also boosted by a $200 million milestone payment from Pfizer, following the U.S. company's launch of an over-the-counter version of Nexium in May, and a $80 million payment related to the Japanese launch of diabetes drug Forxiga.
The company enjoyed a further $117 million benefit from an inter-governmental agreement on a transfer pricing matter, which cut the tax rate in the period sharply.
Many investors believe Pfizer will be back in late November after an enforced six-month cooling-off period - assuming AstraZeneca does not invite it back before then - because the logic of a deal remains strong.
Pfizer would slash its tax bill by moving its tax address to Britain, in a process known as inversion. The case for such tax inversions remains compelling, as evidenced by AbbVie's successful pursuit of Shire.
The U.S. company would not be drawn on its plans for AstraZeneca when it reported results two days ago but said it was still considering big deals.