* Q1 sales fall 13 pct to $6.39 bln vs consensus $6.51 bln
* EPS $1.41 vs forecast $1.31, helped by phasing of costs
* Top-seller Crestor weak in U.S., Canada and Australia
* Shares down 2.6 percent
By Ben Hirschler
LONDON, April 25 AstraZeneca's sales
fell by a bigger-than-expected 13 percent in the first quarter
as patent expiries took a heavy toll, underscoring the
turnaround challenge facing Britain's second-largest drugmaker.
Much of the damage was caused by loss of exclusivity on
antipsychotic medicine Seroquel and heart drug Atacand in many
But the company's top-selling cholesterol fighter Crestor
was also hit by generic competition in Canada, pricing pressure
in Australia and worse-than-expected sales in the United States.
The poor performance suggests new Chief Executive Pascal
Soriot has his work cut out to reverse the fortunes of the
struggling drugmaker, despite some tentative signs of
improvement in a few growth areas.
Demand for Brilinta - a new heart drug for which AstraZeneca
has high hopes - picked up modestly to $51 million from $38
million in the last quarter of 2012.
Emerging markets were also a relative bright spot, with
sales up 9 percent at constant currencies, largely driven by a
21 percent increase in China. Sales of a number of diabetes
products, however, were lower than analysts had hoped.
"While it may be premature to judge the performance of
Astra's growth platforms at this early juncture, some investors
may be disappointed," said Berenberg analyst Alistair Campbell.
AstraZeneca reiterated its expectation for a mid-to-high
single digit percentage fall in revenue this year, with earnings
declining significantly more due to increased operating costs.
Sales in the quarter of $6.39 billion generated "core"
pre-tax profit, which excludes certain items, down 25 percent at
$2.23 billion and earnings down the same amount at $1.41 a
share, the company said on Thursday.
Analysts had, on average, forecast sales of $6.51 billion
and earnings of $1.31, according to Thomson Reuters I/B/E/S.
The beat on earnings reflected a lower-than-expected tax
rate and lighter-than-anticipated expenditure, although with the
full-year outlook unchanged this phasing impact is not likely to
affect full-year earnings forecasts.
Shares in the group fell 2.6 percent by 0930 GMT.
In addition to the weak sales picture, there was also
uncertainty over a new U.S.-led inquiry into manufacturing
standards at a site in northern England.
Chief Financial Officer Simon Lowth said AstraZeneca's
strategy was on track, in terms of investing for future growth,
with a lot more effort being put behind the promotion of
Brilinta in the U.S. market in particular.
"We expect to see the (Brilinta) trajectory really start to
steepen and accelerate on the back of those investments towards
the back-end of this year," he told reporters in a conference
CEO Soriot, who joined from Roche last October, set
out a far-reaching plan last month to return the group to growth
by axing one in 10 jobs and reorganising its drug research
His plan promises no quick fixes, although he aims to double
the number of drugs in late-stage development by 2016 and he
says he will scour the industry for bolt-on acquisitions with
which to replenish the company's medicine cabinet.
Soriot has said on several occasions that he would prefer a
series of smaller "bolt-on" deals rather than a large,
Whether Soriot will deliver in the long term remains to be
seen - but his arrival at the group has not been cheap, leading
to complaints from some shareholders about his pay package.
A group representing local pension funds in Britain is
recommending that its members vote against Soriot's pay at the
company's annual meeting later on Thursday.
AstraZeneca shares trade at a discount to other large pharma
companies, at less than 10 times this year's expected earnings
compared with close to 15 for GlaxoSmithKline and
That reflects analyst forecasts of sliding sales and profits
for several years, with its two top drugs - Nexium for stomach
acid and Crestor - facing loss of U.S. patent protection in 2014
and 2016, respectively.
With cash flows set to decline, rating agencies have
recently become more gloomy on AstraZeneca, with Moody's this
month downgrading its credit rating for the company and Standard
& Poor's cutting its outlook to negative.