UPDATE 3-AstraZeneca sees tough year, cuts jobs

Thu Jan 28, 2010 8:45am EST

* CEO sees lower 2010 core EPS, in $5.75-$6.15 range

* Q4 core EPS of $1.42, vs $1.57 forecast

* To cut additional 8,000 jobs --12 pct of workforce

* Plans share buyback to support stock

* Shares fall 3.3 percent, analysts cautious

(Adds analysts, updates shares, adds Lilly, Bristol)

By Kate Kelland

LONDON, Jan 28 (Reuters) - Drugmaker AstraZeneca gave a downbeat forecast for 2010 with fourth quarter earnings that missed expectations and sought to ease pressure on its stock with a share buyback and job cuts.

The Anglo-Swedish company said on Thursday it saw earnings per share for 2010 in a range of $5.75 to $6.15, down from $6.32 in 2009, and said revenue would be hit by the expected loss of market exclusivity for some key drugs in the United States.

"The next five years will be challenging for the industry and for the company, as its revenue base transitions through a period of exclusivity losses and new product launches," Astra said in a statement.

CEO David Brennan said he expected loss of exclusivity on AstraZeneca's breast cancer drug Arimidex and asthma medicine Pulmicort Respules to squeeze revenues, but was confident it could grow market share for medicines that retain exclusivity.

Investors are focusing on outlooks for 2010, a year when a series of factors including ever-increasing generic competition to big-selling medicines and proposed U.S. healthcare reform could weigh on companies' top and bottom lines.

Astra said it expected a fall in sales of up to the "mid-single-digit" this year as benefits from H1N1 swine flu vaccines and unexpected revenue from heart drug Toprol XL, thanks to market withdrawal of generic competitors, wash out.

Analysts at Deutsche Bank and S&P Equity Research were cautious about the company's long-term outlook. They pointed to potential risks from an upcoming patent trial in the United States over the cholesterol drug Crestor and U.S. regulators decision on the heart drug Brilinta.

AstraZeneca forecast of revenues of $28-$34bn over 2010-14, including $4-6bn of revenues from new drugs, pipeline products, licensing deals. Deutsche Bank said the range was in line with consensus, but the "fresh" element would prompt debate among analysts and investors. AstraZeneca shares were down 3.02 percent to 29.53 pounds by 1310 GMT, versus a 0.14 percent drop in the DJ Stoxx European healthcare sector .SXDP

Two big U.S. drugmakers, Eli Lilly (LLY.N) and Bristol-Myers Squibb (BMY.N), were also reporting on Thursday. Lilly's profit fell short, while Bristol's beat forecasts, and both gave forecasts for the coming year in line with expectations. [ID:nN27212519], [ID:nN27138093]

BUYBACK, JOB CUTS

Astra said it would buy back up to to $1 billion in shares in 2010 and cut an additional 8,000 jobs in a bid to cut costs. The company's website says it employs 65,000 people worldwide, making the job cuts about 12 percent of that.

It said it expected restructuring to cost around $2 billion and deliver annualised cost savings of some $1.8 billion by 2014. "These proposed changes will ensure our business remains competitive in the future," it said in a statement.

Astra's exposure to generics is shown in its valuation, trading at just 8 times forecast 2011 earnings, a discount to rivals like GlaxoSmithKline (GSK.L), Novartis (NOVN.VX), Roche (ROG.VX) and roughly in line with France's Sanofi-Aventis (SASY.PA), which also has considerable exposure to generics.

Astra's core pretax profit rose 10 percent to 2.88 billion in the fourth quarter, giving earnings per share of $1.42 on sales up 9.0 percent at $8.95 billion.

The mean consensus forecast had been for fourth quarter core earnings, which exclude certain restructuring costs and charges, to come it at $1.57 per share and sales at $8.85 billion, according to Thomson Reuters I/B/E/S/. (Additional reporting by Paul Sandle and Sam Cage; Editing by Andrew Callus)

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