UPDATE 2-UCB sees weaker 2010, predicts long-term boost

* 2010 guidance for further decline worse than expectations

* 2009 revenue decline due to generic competition

* Sees drugs Cimzia, Vimpat as blockbusters

* Peak drug forecasts about 500 mln euros above expectations

* Shares drop, but volatile

(Recasts, adds more details, analyst comment, shares)

By Philip Blenkinsop

BRUSSELS, March 2 (Reuters) - Belgian drugmaker UCB UCB.BR disappointed investors with a 2010 outlook depressed by yet lower sales of its top epilepsy medicine, despite predicting two new products would be blockbusters later this decade. UCB, a central nervous system and immunology specialist, is facing a key transition between long-standing successes now facing generic competition, epilepsy drug Keppra and antihistamine Zyrtec, and three recently launched medicines.

Revenue dropped by 13 percent last year to 3.1 billion euros ($4.19 billion), at the bottom end of its own guidance, due to a 28 percent fall-off of Keppra sales, and was set to fall to 3.0 billion euros this year, worse than market expectations.

UCB shares proved volatile in early trading, falling by as much as 4.8 percent and gaining up to 2.1 percent, with bullish long-term forecasts but the weak 2010 outlook.

At 1039 GMT, they were off 1.9 percent at 31.935 euros, against a 0.25 percent drop of the DJ Stoxx European health care index .SXDP.

UCB’s 2010 revenue forecast compares with the average 3.2 billion euros in the Thomson Reuters I/B/E/S poll of 21 analysts. Its core profit (EBITDA) target of about 700 million euros was also below market estimates.

UCB said the weakness reflected yet lower Keppra sales as well as divestments of non-core businesses, such as in emerging markets to GlaxoSmithKline GSK.L [ID:nLN109971] and a hyperactivity drug to Shire SHP.L [ID:nLK196592 ]

Increased sales of its leading three new drugs would only partially offset this.

Many of UCB's larger peers, such as GlaxoSmithKline GSK.L AstraZeneca AZN.L and Pfizer PFE.N, are faced with the loss of patent protection and cuts to government healthcare budgets, forcing radical cuts to their costs. [ID:nLDE61408I]

New medicines also face a tough fight in an increasingly price-conscious market.

UCB launched its own cost-cutting drive SHAPE in 2008, with plans to cut 2,000 jobs and sharpen its focus on key new drugs.


UCB also gave its first peak sales guidance on Tuesday for these new medicines from the middle of the decade.

Cimzia for rheumatoid arthritis and bowel disorder Crohn’s disease whould reach at least 1.5 billion euros ($2.03 billion), Vimpat mainly for epilepsy at least 1.2 billion euros and Parkinson’s disease patch Neupro at least 400 million euros.

“These three new products have the ability to drive UCB’s growth over the next 10 years and intense growth... as no patent expiries are going to hit UCB before the year 2020 and beyond,” Chief Executive Roch Doliveux told a conference call.

The guidance for Vimpat in particular was more bullish than market expectations of 600-700 million euros. Overall, the forecasts were some 500 million euros more than analysts had been projecting.

UCB’s most successful drug Keppra hit a sales peak of 1.27 billion euros in 2008.

UCB's shares have gained some 9 percent this year, against the 3 percent rise of the DJ Stoxx healthcare index .SXDP, inspired by a series of upgrades from large brokers steadily more upbeat about its long-term prospects, particularly for Vimpat.

“These are bullish forecasts, but they need to be backed up by data. 2010 should help,” said Peter Welford, analyst at Jefferies International. (Editing by Sharon Lindores, Mike Nesbit) ($1=.7395 euros)