* One-off payments and tax benefit flatter Q2 results
* Investors focused on possible Pfizer return
* Q2 revenue $6.45 billion vs consensus $6.29 billion
* Q2 core EPS $1.30 vs consensus $1.10
* Now assuming generic Nexium in U.S. from Oct. 1
(Adds CEO comments from conference call, further analyst
By Ben Hirschler
LONDON, July 31 AstraZeneca raised its
sales and earnings forecasts for the year on Thursday, showing
resilience after seeing off a $118 billion takeover approach
from rival Pfizer two months ago.
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,
despite the fact some investors favour a deal.
He declined to comment on whether Pfizer might return but
said he would flag AstraZeneca's progress as a standalone group
at an investor day on Nov. 18 - just before a mandatory
six-month cooling off period ends and Pfizer can renew its
Soriot 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
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 data.
"There is clearly visible momentum across our business as we
continue to execute on our strategy of returning to growth and
achieving scientific leadership," Soriot told reporters. "We now
have one of the most exciting pipelines in the industry."
He also said he hoped to strike partnering deals in the
second half of 2014 for certain anti-infective and neuroscience
drugs - including an experimental treatment for Alzheimer's -
which will help reduce some of the firm's drug development
GENERIC NEXIUM DELAY
Revenue in 2014 is now expected to be in line with 2013 at
constant exchange rates - an increase on the previous forecast
of a low to mid single-digit percentage decline - and core
earnings per share are set for a low double-digit decline
instead 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 improved outlook for the year was likely to be taken in
its stride by the market.
Shares in the company were little changed at 4,351 pence by
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
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.
Jefferies analyst Jeffrey Holford said the fact that
AstraZeneca had set an investor day for Nov. 18 implied it was
"very unlikely" to invite Pfizer back for talks at the end of
August, as it could in theory do under British takeover rules.
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.
(Editing by Tom Pfeiffer and Greg Mahlich)