* Low-to-mid single digit percent fall seen in 2014 sales
* 2014 earnings set to drop "in the teens"
* Forecast declines steeper than market expected
* Q4 sales $6.84 bln vs consensus $6.88 bln
* Q4 core earnings per share $1.23 vs consensus $1.16
By Ben Hirschler
LONDON, Feb 6 AstraZeneca expects
earnings to keep falling in 2014 as generic competition to its
popular heartburn and ulcer drug Nexium takes a big bite out of
U.S. profits from late May.
The British drugmaker said on Thursday that group sales this
year were likely to decline by a low-to-mid single digit
percentage figure, with earnings per share falling "in the
teens", due to the loss of such profitable medicines.
The decline was steeper than investors expected and the
shares fell 3 percent by 1045 GMT. Analysts had been forecasting
2014 sales to fall by 1.5 percent and earnings by 9.4 percent,
according to Thomson Reuters data.
"In the near term these headwinds will remain challenging,
however I am confident that we can return to growth faster than
anticipated," said Chief Executive Pascal Soriot.
He reiterated a prediction that 2017 revenue would be
broadly in line with 2013 and said a restructuring programme had
now been expanded to deliver a total $1.1 billion of annual
Despite the tough backdrop, AstraZeneca has decided to keep
investing in priority areas such as diabetes, where its presence
has been bolstered by a recent $4 billion deal to take full
control of an alliance with Bristol-Myers Squibb.
But the diabetes business is highly competitive and
AstraZeneca had to take a $1.76 billion impairment charge due to
weak sales of the medicine Bydureon.
AstraZeneca is also throwing resources behind its new heart
drug Brilinta, which has got off to a slow start but is seen as
a long-term winner. The drug sold $92 million in the fourth
Brilinta's prospects have become less certain, however,
since it was revealed in October that U.S. authorities were
looking into a major clinical trial called PLATO that was used
to win marketing approval.
Soriot said he was confident of the integrity of the study
but acknowledged that media attention surrounding the case had
hit demand for the blood-thinning pill.
"It is creating uncertainty and it is impacting us," Soriot
told reporters. "We will stay focused on promoting this product
and, hopefully, as soon as the investigation concludes we can
see some growth again."
Symbicort for asthma and smoker's cough was a bright spot
with sales up 11 percent at $976 million in the quarter as it
took market share from GlaxoSmithKline's Advair.
Overall sales in the fourth quarter of 2013 fell 6 percent
to $6.84 billion, generating "core" earnings, which exclude
certain items, down 28 percent at $1.23 a share.
Industry analysts had, on average, forecast sales in the
quarter of $6.88 billion and earnings of $1.16 a share,
according to Thomson Reuters.
TURNAROUND A LONG HAUL
Soriot, who has been in the job for just over a year, has
previously warned that turning around AstraZeneca will take
several years - but he is making progress in rebuilding a
pipeline of new medicines to replace those going off patent.
This has involved striking a number of bolt-on deals and
accelerating in-house research programmes, with the result that
the group is now more focused on developing internal projects
than buying in experimental medicines from other firms.
"AstraZeneca's long-term future looks increasingly secure,
but the near-term outlook is increasingly bleak," said Berenberg
analyst Alistair Campbell.
The company now has 11 new-drug programmes in late-stage
Phase III testing, almost double the number a year ago, and 19
candidates that could start late-stage Phase III trials in 2014
Hopes are particularly high for its cancer research, where
it has started trials for immunotherapy combination treatments
for which the first results are anticipated in 2014/15.
AstraZeneca is behind the likes of Bristol-Myers, Roche
and Merck & Co in the race to develop
immunotherapies - a hot new area of cancer research - but it is
betting on combination treatments to help it to catch up.
Soriot put a floor under the group's decline last month by
predicting 2017 revenue roughly in line with 2013, while
stopping short of giving a medium-term target for earnings.
Britain's second-biggest drugmaker is already suffering from
generic competition to its antipsychotic Seroquel, while
top-selling Crestor, for high cholesterol, faces U.S.
competition from cheap copycat drugs in 2016.
Loss of Nexium patent protection in the United States from
the end of May 2014 comes as a further heavy blow.
The patent expiries are putting downward pressure on
AstraZeneca's sales at a time when many of its rivals have put
their biggest patent losses behind them.